The regulator has assumed that customers will decide first how they want to pay – by direct debit, in receipt of bill, by pre payment, etc. They will then be offered a maximum of four tariffs for each form of supply (electricity or gas) tailored to that payment type. They will also be offered a dual fuel discount.
Companies can offer additional tariffs for collective switching deals.
The review also proposes that suppliers have to tell their customers about the cheapest tariff on offer and provide vulnerable consumers, or those who haven’t changed their tariff for a long time, information on the cheapest tariff available to them across the whole market.
All the tariffs will have to be expressed as a standing charge and in pounds and pence “to give the consumers greater clarity”.
Ofgem’s chief executive Alistair Buchanan said: “Our plans will put an end to consumers being confused by complex tariffs and will usher in a simpler, clearer, fairer and more competitive energy market for all consumers.
“Ofgem is determined to press forward with proposals to deliver for consumers the most far-reaching shakeup of the retail energy market since competition was introduced.”
The full consultation will be published next Friday. The regulator aims to introduce the reforms by the summer of 2013.