New rules will make for 'competitive and fair' energy market

23 March 2009 / by Rachael Stiles
Energy industry regulator Ofgem has announced new rules, which it hopes will "seal the flaws" in the energy market, bringing about more fairness and clarity for the consumer.

After carrying out a probe into the energy market, Ofgem has revealed proposals for reforming the industry, making it work better for all consumers, but particularly for vulnerable customers and small businesses.

In a two-pronged attack on the unfairness in gas and electricity provision, Ofgem will ban "unjustified price differences" to prevent disparity between customers in different areas of the market, such as those on pre-payment meters, alongside a set of solutions to "specific retail market issues."

The new rules will include annual statements which clearly state the customer's consumption, the name of the tariff they're on, and a reminder of their right to switch; simplified information will make it easier to compare gas and electricity prices and switch energy provider if they find a better deal; and Ofgem hopes that greater financial transparency will give consumers confidence that the market is "competitive and fair."

"Our undue discrimination rule will address the symptoms of flaws in the market while our retail market measures will treat the causes," explains Ofgem

chief executive, Alistair Buchanan.

"This is an emphatic move by Ofgem to clear the decks of obstacles that prevent consumers from getting access to the best offers," he added. "All consumers will be given greater power in the market and small businesses in particular will have a stronger hand to play in the market."

Sean Gardner, from comparison website SimplySwitch, said that in an ideal world the energy companies will fall in line with the new rules, but has his doubts about their willingness to do so.

He said that "it’s ludicrous to think that competing energy companies will support Ofgem’s suggestion that they remind customers of their right to switch," and that they "will have to be dragged kicking and screaming."

But, Mr Gardner is hopeful that the proposals will have some positive effects. "The Ofgem proposals should make energy pricing more transparent and could also mean cheaper energy bills for some," he said, "which of course is the biggest bonus of all."

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