Ofgem Finally Puts It's Foot Down And Goes To War With The Energy Firms

OFGEM, the UK energy regulator is launching another front in its long war with the energy companies by demanding clearer cut pricing of their tariffs. The energy companies are regularly competing with the bankers for the public enemy one in Britain; with good reason as British homeowners pay the most for heating and electricity in Europe.

The OFGEM made statements accusing the power suppliers in the UK of confusing consumers. There are now hundreds of various rates for electricity and gas, which has confused customers into understanding what they will be paying until they start receiving their bills - when it's too late.

Reforms of the industry are sent to be imposed in just two months, with OFGEM lawyers confirming to the 'big six' energy providers that the regulator is empowered to act as they see fit. The companies now have just six weeks to comply with the regulator's recommendations.

Pricing policy has long been an issue for the energy regulator since an initial investigation was carried out into this area in 2008. Having given the industry many opportunities to change, OFGEM has been forced to step in after describing the energy company's response to their findings on pricing policies 'disappointingly poor'.

Introducing market forces into energy supply was designed to benefit consumers as competition would reduce prices and give customers a better deal. However, since 1990 when the energy market was deregulated, the fact is that energy prices have risen sharply. According to OFGEM, these price rises do not reflect wholesale energy prices and so they have been forced to step in.

The Big Six, for the record are NPower, EDF Energy, E.ON, Scottish and Southern Energy, Scottish Power and British Gas. All of which span the EU, one of the prime reasons energy prices are so high, EU regulation, interference and EU Green and Carbon taxes, but that's another article all by itself.

One of OFGEM's main drives is for a single tariff, as a flat rate for gas and electricity should be one of the main ways to make prices better understood and more comparable between the energy suppliers for the public. With a reduction and much simpler range of offers on top of the flat rate tariff if customers choose one of these offers.

Simplifying energy rate prices should give more power to consumers to hold the big six to account and if prices and the competition is clearer to see, then the hope is it will eventually lead to lower energy prices across the board.

One indirect and unintended side effect could be in the online price comparison market, an industry which has benefitted and grown off the confusion of the dizzying array of price tariffs available. How sites such as Moneysupermarket.com go from here will be interesting to observe.

Energy companies have dragged their heels for three years over their pricing policies and so they are likely to be examining the OFGEM recommendations closely. Whatever the outcome, consumers are likely to be the big winners following these changes as prices will be easier to compare and, hopefully, more competitive.