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New Department for Energy and Climate Change measures announced to help energy consumers - Turn2us

Turn2us water and energy costs information sheetNew measures to help energy consumers have been announced this week by the Energy and Climate Change Secretary, Edward Davey. They aim to ensure that energy consumers are treated fairly and make it easier for households get a better deal for their gas and electricity.

The new steps include:

  • New powers for Ofgem. Ofgem, the energy regulator for Great Britain, will be able to require companies who have breached licence conditions to compensate consumers who have lost out directly, rather than necessarily having to rely on a voluntary approach. This means consumers will benefit directly instead of fines just going to the Treasury. The Government has already strengthened Ofgem’s hand by making it harder for energy companies to block licence changes and introducing tougher rules on the information suppliers have to provide to their customers. Following a consultation over the summer, the Secretary of State has decided that Ofgem’s powers will be increased further.
  • Help for pre-payment meter customers in debt. The Government wants energy consumers wherever possible to be able to choose the best energy tariff for them. At the moment, pre-payment meter customers who are more than £200 in debt to their energy supplier cannot switch to another company – which means they could be missing out cheaper deals elsewhere. Following a review by Ofgem, a voluntary agreement with suppliers means that this threshold will be raised to £500. From 1 November 2012, tens of thousands more households will be able to shop around for a better tariff and switch if they find a cheaper deal.
  • Collective Switching Competition. Edward Davey has been pushing to make it easier for people to club together to get a better deal on their energy. ‘Collective purchasing and switching’ as it is known has the potential to help the most vulnerable households to save.  Now he aims to promote the concept, with a £5m competition for the most innovative local authority or third sector schemes.
  • Better billing. Energy bills are rising, but fewer people than ever seem to be shopping around and switching to a better deal. That is why Government is working with Ofgem to ensure that consumers have clear information on their bills about the supplier’s cheapest tariff and the savings consumers could make by switching. The Government is also working with suppliers to get better information for consumers, including the possibility of putting Quick Response (QR) codes on energy bills/annual statements to make it possible to switch through mobile phones.
  • Independent suppliers summit. 99% of domestic households are customers of only six main energy suppliers. The Government wants to see more competition in the market, with companies working harder to win and then keep consumers’ business. Building on the work the Government has already carried out to reduce barriers to entry and growth, Edward Davey will host a summit with independent suppliers to explore with them what more can be done.

Response from Consumer Focus

Commenting on the measures announced by Ofgem to improve conditions for pre-payment meter customers, Audrey Gallacher, Director of Energy at Consumer Focus, said:

"Measures to make it easier for customers who use pre-payment meters to switch suppliers are a welcome step in the right direction. For a long time these customers have suffered from the double whammy of high prices and reduced choice. The key now is to ensure that pre-pay users actually take advantage of the scheme that allows them to switch supplier even if they are carrying debts of up to £500.

"It is also good news that more is being done to stop customers from being disconnected for falling behind with their energy bills."

Read the Turn2us fuel poverty information sheet

Read our section on water and energy costs

Sources: Department for Energy and Climate Change and Consumer Focus

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