The complex nature of the market means it can be difficult for people to compare energy providers and switch to a cheap electricity supplier.
This is according to Ofgem, which has welcomed new government proposals that aim to tackle the issue.
A spokesperson for the industry body said many suppliers have already admitted their rates can be confusing and they need to change the way they operate to make these simpler for consumers.
It noted that new reforms, set out by deputy prime minister Nick Clegg, aim to open up the electricity market in the UK.
"They also set out tougher standards of conduct so that suppliers treat customers fairly," the spokesperson added.
Mr Clegg pointed out there are currently more than 120 energy tariffs available to people in the UK and seven out of ten individuals are not on the best deal for their needs.
Ofgem urged supplies to back the changes "as a first step in re-building customer trust".
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