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Energy proposals may push up bills

HOUSEHOLDS have been warned their energy bills could rise under Coalition Government plans to ensure they receive cheaper gas and electricity prices.

Under the proposals, energy firms would be allowed a maximum of four tariffs for each fuel type.

The move comes amid long-standing concerns that many homes are paying hundreds of pounds a year more than is necessary for gas and electricity because of the confusing array of different tariffs.

The issue has become more acute in recent years because of rising wholesale prices that have been passed on to customers.

The Coalition insists the moves will deliver better deals for consumers. But experts warned the changes could backfire and push up prices for many.

Guy Newey, head of energy at the think-tank Policy Exchange, said: "Cutting the number of tariffs and forcing energy companies to put households on the best rate could end cheap deals. This risks punishing families who do the right thing and shop around."

Among the four rates the firms can offer, one will have to be "fixed term, fixed price" and another a standard variable tariff.

Bills will also have to contain personalised information about the cheapest tariffs suppliers offer for different payment methods.

Ministers insist they cannot restrict choice to just one price because households use energy differently and to do so might eradicate measures such as "green tariffs".

But they believe fewer rates and a simpler system will make it easier for consumers to shop around for the best deal. Collective switching schemes, such as those proposed by Labour, will also still be able to negotiate individual prices.

Suppliers will have to establish a co-ordinated network of voluntary organisations and community groups to help vulnerable households get a better deal.

The Coalition said it "wants all customers to have been placed on the cheapest price available ... for the tariff type of their choice as quickly as possible and, at the latest, by summer 2014".

Contextual targeting label: 
Local government

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