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Energy firms must provide lowest tariffs for customers

By Katie Anderson on October 18, 2012

Prime Minister David Cameron has promised to reform the domestic energy market in the UK by compelling energy suppliers to provide their customers with the lowest tariff.

The PM addressed the issue during Prime Minister’s Questions earlier this week, but hours after making his comment the promise had been diluted by government officials.

Cameron said: “I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers”.

Whilst the Prime Minister’s comment seemed unequivocally clear and assured at the time, a Downing Street spokesperson later clarified that energy suppliers would not necessarily be forced to offer the lowest tariff.

The spokesperson said: “We have asked energy companies to take action themselves and make clear what the lowest available deals are. The point is, in practice this market is not operating for everyone. A small minority of people are actually switching deals; therefore, we need to push some of this responsibility on to the energy companies”.

Two significant points can be gleaned from the Prime Minister’s bold statement: energy suppliers will not be required to offer just one tariff; and even if the lowest tariffs are offered to customers they will not necessarily be competitively priced. Making customers aware of cheaper electricity and gas central heating tariffs is desirable, but failing to address the problem of rising energy bills somewhat defeats the purpose.

Richard Lloyd, the Executive Director of Which?, responded to Cameron’s speech by stating: “This is a big moment for consumers, but we must now see these words turned into action”.

Domestic energy users in Britain have no reason to celebrate Cameron’s sound bite. Energy prices will continue to rise and tariffs will remain far higher than the wholesale cost of gas and electricity for as long as the market is monopolised by the big six suppliers.

Shadow Energy Secretary Caroline Flint later noted that Cameron’s words were not supported by a tangible plan. Flint said: “The truth is… this policy isn’t going anywhere because the Prime Minister actually announced a policy that within ten hours [had] disappeared”.

Anne Robinson, of uSwitch, added that the Prime Minister’s plan would actually have the effect of ‘killing competition’ in the energy sector.