Energy companies' profits soar as watchdog reveals plans for tariff simplification
Ofgem revealed a series of measures designed to encourage more competition in the industry and simplify bills while also releasing details of soaring profits for power companies.
Energy companies' profits are up to £125 from just £15 a few months ago, according to the industry regulator said today (October 14).
The watchdog wants to give consumers a much clearer choice than the 400 tariffs currently available.
It wants to make each supplier offer just one standard tariff for each payment type, with the standing charge set by Ofgem.
Suppliers will only be able to change the unit price, which means, according to Ofgem customers will be able to compare prices at a glance.
Standard tariffs will drop all other complications like different levels of price and 'complex' discount structures, so the lower the price the smaller the bill, with 'no exceptions'.
In its latest report Ofgem said it also wants to allow consumers the choice of more innovative tariffs and to encourage new firms to enter the market to increase pressure on the 'Big Six'.
Ofgem has also published its latest report on prices which shows that the average dual fuel bill now stands at £1,345 and, following recent price rises, estimated suppliers margins have peaked at around £125 a year.
Although, Ofgem says, these margins are likely to fall back next year.
Ofgem's chief executive, Alistair Buchanan, said: "Ofgem's tariff reforms offer the quickest way to create a market where consumers can have confidence that prices are set by effective competition.
"Suppliers have told Ofgem they want to restore confidence in the industry and now they have the chance to do so.
"We will require suppliers to express prices using standardised price information for these innovative deals so they can be easily compared with standard tariffs.
"However, consumers on these more innovative tariffs, will be protected from any price rises for the duration of the contract."
Mr Buchanan also said Ofgem is developing an energy label for every tariff which will give consumers all the 'vital information' they need to make an accurate comparison.