Ofgem is working towards creating more transparency in the energy market for consumers.
Last year June, 70% of UK's consumers were on the more expensive “default” standard variable tariff, costing consumers £1.4bn more, according to the Competition and Markets Authority (CMA). This figure dipped slightly to 66% in November, a figure which Ofgem considers too high and is now taking steps to reduce it.
Ofgem published its first energy company league table late last year which compares the most expensive standard tariffs with the cheapest deals on the market. The table will compare the average energy bill paid by a household on a standard variable tariff from the larger energy companies with deals from the 10 cheapest suppliers. Consumers can save up to £260.
According to Ofgem, the table gives the UK's electricity consumers a "greater transparency" around tariffs so that they can save money on their electricity bills by moving to more competitive suppliers, thereby reducing the large number of consumers that continue to overpay for their gas and electricity.
The government is also launching a call for evidence on giving customers access to accurate electronic data on their energy consumption so that they can share it securely with price comparison websites in return for individual quotes.
Energy secretary Greg Clark is highly supportive of Ofgem's move to help customers pay less. He says that "millions" continue to pay too much for their energy and that the proposed measures are a positive step towards helping consumers benefit from a more competitive energy market which is promoting an increased level of competition.
The Citizens Advice chief executive, Gillian Guy, said that the league table will "lift the lid" on the price difference between standard tariffs and cheaper deals, helping those customers who are currently paying over the odds for their gas and electricity identify a better rate. He also pointed out that he would like to see energy companies do more off their own back to help customers who are on a low income.
Mark Todd, the co-founder of energyhelpline.com, said the energy price league table would expose just how expensive standard energy tariffs were and how much customers could save by switching. He said: “We hope this publication acts as a clarion call for consumers to ditch these horrible tariffs.....Standard energy tariffs offer almost no protection against price rises as well as very high prices.They are the worst of all worlds. Around two thirds of the population, about 40 million people, are blighted by their scourge and so considerably poorer as a result. The basic rule is: never be on a standard variable energy tariff – they are a rip-off."
Energy UK figures released on Wednesday showed more than 4 million customers switched electricity supplier this year, “eclipsing” the past three years, while more than 400,000 switched last month – the highest figure since November 2013.
Lawrence Slade, the chief executive of the industry body Energy UK, said: “A record number of people have switched electricity supplier in 2016. This is fantastic progress, but more needs to be done.
“Over 40 companies across the industry, big and small, are working hard to win customers. I’d encourage everyone to look at the best deal for them, whether that is one that offers a lower price or better customer service, there are choices for everyone.”
David Elmes, a Professor of Practice and head of the Global Energy Research Network at Warwick Business School, says that two suppliers have over 90% of customers on a more expensive tariff than the same firm offers, two more with over 70% - that’s over 14 million customers across just those four companies.
He points out: “The challenge will be keeping such data up to date. If customers try to switch, will they see these deals if they contact a firm or use a comparison website. A further step proposed is that customer details for people who haven’t switched for a certain time will be made available to competitors. But while getting a good deal is very important, we should also be helping people think of ways to use energy more efficiently and save that way too.”