Energy Minister Greg Barker said the Prime Minister had today delivered on his promise to take action and get people on the lowest tariffs for their energy bills.
The Government announced plans to force energy suppliers to offer customers their best deals.
Under proposals outlined today:
• Households will no longer face hundreds of tariffs, with energy companies limited to four tariffs per fuel;
• Energy companies will have to make bills simpler for customers to understand, and outline personalised information on the cheapest tariff that they can offer;
• Households will be moved onto the cheapest tariff under their supplier that suits them.
Mr Barker explained that with over £300 difference between the cheapest and the most expensive tariffs on the market, the Prime Minister’s action is likely to make a significant difference to households up and down the country worried about their energy bills.
The DECC Minister added: “The Prime Minister promised to take action to get people the lowest tariffs and he has delivered.
“Today’s announcement marks the end of confusing tariffs that cost too much. It also again shows this Government’s determination to get behind people who work hard and want to get on in life and support vulnerable people at risk of being ripped off.”
Commenting on the energy tariff proposals, Juliet Davenport, CEO and Founder of Good Energy, said: "If we want people to have better control of their energy use and therefore their costs, then suppliers have to be allowed to innovate in ways that are clearly good for everyone. Good Energy's launch of its local electricity tariff yesterday is a great example of how they can do that.
"The question is whether under what is being proposed that kind of innovative thinking will be too restricted. Limited competition and stifled innovation is in no-one's best interest, and its always the consumer that misses out. We look forward to engaging with the Government around these latest proposals and making that point.”
Angela Knight, Chief Executive of Energy UK, the association representing the gas and electricity sector, said: “Customers don’t have to wait for these proposals as the energy companies have already made tariffs simpler and easier to compare; they are much fewer in number and it is easy to switch from one company to another.
“We agree with the overall intention of Government but we will need to look at the detail of what is proposed to make sure that there is enough choice for households.
“Customers need choice as some prefer the certainty of a fixed tariff while others want a variable tariff. And then some want to buy both gas and electricity from one company and others buy gas from one and electricity from another, with others making a definite decision to go for a renewable tariff.
“Being on the right tariff is essential in keeping down bills. But energy is not the only item on the bill and the other costs such as paying for the network and the various Government schemes also play an increasingly significant part and are going up.
“If we are going to get to the right outcome with these and any other proposals there needs to be an open and honest debate with all the issues on the table.
“We believe that it is important that assistance is targeted – we need to make sure that we are helping the vulnerable engage in the market and that we are getting them the best possible deal and are able to encourage them to take up energy efficiency measures.
“It’s also important that we review progress on these measures on a regular basis. We must be alert to any signs that any changes put in place are detracting from interaction and innovation in the market – especially at a time when so much investment is needed in our energy infrastructure and all the jobs and economic growth that will flow from that.”
The CBI welcomed plans to reduce the number of tariffs that energy firms can offer, and ensure that consumers are automatically placed on the cheapest tariff available.
Katja Hall, CBI Chief Policy Director, said: “The Government is right to focus on the challenges householders and businesses face on energy prices. In the short-term, we need to make sure consumers are on the best deal and encourage improved energy efficiency, but this is no silver bullet.
“To manage energy bills over the longer term we need to maintain a competitive retail market, but also build a reliable, affordable and low-carbon energy mix, and the much awaited Energy Bill could help achieve this.
“Billions of pounds of investment depend on getting this bill through Parliament and onto the statute books, so the Government must stop dragging its feet and publish the bill before the end of month, as promised.”
And Ofgem’s Chief Executive Alistair Buchanan added: “Ofgem welcomes that Government shares our vision of a simpler, clearer, fairer energy market for consumers and we will work closely with the Department of Energy and Climate Change (DECC) to deliver the most radical change to the retail market for a decade.
“These proposals – based on Ofgem’s Retail Market Review (RMR) - will put an end to consumers being bamboozled by complex tariffs and deliver choice that consumers easily understand. We are also proposing much simpler information for consumers such as making suppliers give consumers their cheapest tariff on their bill.
“Ofgem is also going to enforce fair treatment of consumers using licence standards backed by fines.”
Friends of the Earth’s Head of Policy and Campaigns Andrew Pendleton said: “Action to simplify energy tariffs is certainly welcome, but if David Cameron really wants to cut bills the thing he should regulate is his gas-guzzling Chancellor.
“If George Osborne’s plans for more gas-fired power stations go ahead they will lock the nation into dirty and increasingly expensive fossil fuels for decades.
“To create a long-lasting solution to soaring fuel bills, and tackle climate change, we need to invest in a massive energy saving programme and develop the UK’s huge clean energy potential from the wind, waves and sun.”
Ian McCaig, CEO of First Utility, the UK's largest independent energy supplier, commented: "First Utility is broadly very supportive of the principles of what the government is proposing. Nearly three quarters of UK consumers historically pay more for their energy than they need to.
“The implementation of any new legislation needs to ensure that consumers have transparency of the best tariffs available - this should be across the market and not just from their existing supplier. We look forward to continuing to support the government with the development of this legislation which should help to drive energy pricing down for the consumer and encourage competition.”
Ecotricity founder Dale Vince believes all energy companies should offer their customers their best price regardless of when they joined or how they pay – including customers on pre-payment meters – but believes this legislative move is good news for householders.
He added: “We have an Ethical Pricing Policy and offer just two simple tariffs. All of our customers are always on our best price – no matter when they joined us and regardless of how they pay – including customers on pre-payment meters.
“And, our customers are free to leave us if they wish, at any time, with no penalties.
“The essence of this is the pursuit of simplicity, transparency and fairness in all that we do.
“The Big Six energy suppliers offer hundreds of tariffs between them, including discounted rates that lure in new customers and are subsidised by the 75% of their customers on a standard tariffs, this is predatory pricing.”
“This is quite at odds with the approach of the Big Six energy companies who have more than 400 tariffs between them and a complete lack of transparency. They use predatory pricing to lure in new customers with discounted rates that are subsidised by the 75% of their customers on standard tariffs.”