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Energy consumers promised a ‘better deal’

By Katie Anderson on September 26, 2012

Energy and Climate Change Secretary Ed Davey has promised a ‘better energy deal’ for British households.

According to a press release published by the Department of Energy and Climate Change (DECC), industry regulator Ofgem will be given new powers to compel energy firms that have breached their licence conditions to compensate customers.

At present, energy companies are not legally required to provide their customers with compensation for licence violations; instead, fines are paid directly to the Treasury. Ensuring that energy consumers receive a direct benefit if they have suffered as a result of licence violations should help to foster a fairer environment for customers.

Households using prepayment meters will also be given more scope to switch energy suppliers if they have fallen into debt. At present, consumers who use prepayment meters are prohibited from switching energy firms if they owe more than  200 to their existing supplier. On the 1st November this limit will increase to  500, making it far easier for energy consumers to search the market for the cheapest electricity and gas central heating tariffs. This measure might also help some households lift themselves out of fuel poverty, as energy tariffs can vary considerably from one supplier to the next during certain times of the year.

On the subject of fuel poverty, the Energy Secretary also hopes to reduce the number of consumers who are struggling to pay for their energy bills by improving collective purchasing and switching, which allows people to form groups with the aim of obtaining a better deal on their gas and electricity.

In addition to announcing a summit for independent suppliers that is intended to introduce more competition to the UK’s energy market, the DECC vowed to improve the information provided on domestic energy bills. Clearer billing should pave the way for a system that makes it easier for consumers to assess their energy requirements and shop around for a cheaper or more suitable supplier.

Ofgem recently criticised the big six energy firms in Britain after discovering that just 15 per cent of suppliers had hit their targets under the Community Energy Saving Programme (CESP). The Energy Secretary subsequently applauded the regulator’s efforts to hold “energy suppliers’ feet to the fire”.