Suppliers should offer one tariff, says report
Forcing suppliers to offer one tariff would make it easy for consumers to compare prices and switch, says IPPR
Energy suppliers should be forced to offer a single tariff, according to a new report by an influential left wing think tank.
The report from the Institute for Public Policy and Research (IPPR), commissioned by comparethemarket.com, said the majority of consumers would benefit if companies only offered a single tariff.
The report, entitled ‘Keep it simple: Energy bills made easy’, recommended legislating for a single tariff per supplier.
A single tariff would allow energy companies to compete directly with each other on price, according to the IPPR, while making it easy for consumers to compare different providers.
The recommendation is at loggerheads with the Competition and Market Authority’s recommendation in its 2016 energy market review, which said that Ofgem should allow energy suppliers to offer more than the current limit of four tariffs in order to improve competition.
The new report argues that simplifying choice would make it easier for the majority of consumers, who remain stuck on standard variable tariff (SVT) deals, to switch suppliers.
The IPPR says the only exception to the single deal limit could be the discounted tariffs received by some vulnerable, low-income consumers.
The report also recommends the creation of a consumer engagement arm within Ofgem to encourage switching by using the data provided by smart meters to personalise information and advice to consumers.
In a bid to get customers more engaged, the report also recommends as a first step a “significant simplification” of energy bills to improve consumer engagement.
Based on work with focus groups, the report has created two possible future and simpler bill formats.
It says that compared to energy bills, those offered by other sectors were felt to be “simpler and more accessible”.
Hywel Lloyd, associate director of the IPPR, said: “With so many people on standard tariffs or yet to switch, simpler bills are a part of making consumers more engaged with the amount they are paying for energy. In future each energy company having a single tariff will ensure a fairer deal for the great majority of consumers.”
Peter Earl, head of energy at comparethemarket.com, said: “Getting information that they need and vitally, that it is clear so they can understand it and act upon it. We need a bill jargon bonfire, and it is time to light the match.”
The IPPR report follows the announcement earlier today that E.on has decided to scrap its SVT in favour of a new default tariff.
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