New year brings simpler energy tariff pricing

Suppliers are now limited to a offering a choice of just eight tariffs: four for gas and four for electricity.

Energy regulator Ofgem hopes these changes will help simplify the market for the consumer.

Energy UK, which represents suppliers, said the changes would "help people get the best deal" on their energy. The moves are the result of a Retail Market Review which began in 2010.

Further reforms will be introduced by April, including forcing suppliers to tell consumers which of their tariffs are the cheapest.

Ofgem Chief Executive Andrew Wright says the changes will drive down prices.

"Profits are not an entitlement,” says Wright. “They should be earned by companies competing keenly to offer consumers the lowest prices and the best service. Now it is up to suppliers to build on our reforms to restore consumer confidence in the energy market."

Ofgem will produce an annual report to consumers on the health of competition in the market.

Richard Lloyd, Executive Director of Which? says the changes are a step in the right direction, but don't go far enough to help consumers find the cheapest deals.

“This is why the Government should intervene with more radical measures including simpler pricing, greater transparency and scrutiny of the cost of energy policies, and the separation of supply from generation businesses. More must be done to keep prices in check and give consumers confidence that the price they pay for their energy is fair.”