Ofgem 'set to delay' energy market reforms - 11/06/2012

Planned reforms to the UK's energy market that could make it easier for people to switch energy provider may be delayed.

This is after Ofgem stated it would extend the process by several months beyond its earlier timetable, which it said acknowledges efforts by some suppliers to act on customer confusion in the market, the Financial Times reports.

Practices that are under review as part of the reforms include discounts for dual-fuel tariffs offered to households that take their gas and electricity from the same supplier.

Reductions for those paying online and by direct debit are also being investigated amid concerns companies are discriminating against 'sticky' customers who may be less likely to perform an energy comparison to find a better deal.

Figures from the energy industry suggest the cheapest variable-rate deals could see discounts of £130 or more compared with a standard deal.

It was noted by Nick Luff, finance director at Centrica - the owner of British Gas - that while plans to reduce the complexity of the tariff system and other measures to stimulate competition are needed, proposals to eliminate some of the most common discounts offered will be bad for end-users.

He told the publication: "It's not in the interest of consumers to dispense with discounts. A lot of our customers benefit from dual fuel discounts. Under Ofgem rules, that wouldn't be allowed and we are pushing back on that."

Energy expert at Consumer Focus Hannah Mummery also raised concerns that removing dual-fuel and payment type discounts could penalise some customers.

The organisation called for a more nuanced approach to be taken that would allow suppliers to continue offering such discounts, as long as they are not used in 'predatory pricing'.

Recently, a spokesperson for Ofgem explained further action is required to improve the energy market for consumers, after research by the regulator found it is still too complex.

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