Ofgem Criticise ‘Big Six’ Suppliers

By Lalita Augustine

Regulator Ofgem has told energy firms they must offer simpler tariffs to help consumers compare prices.

They say that customers are ‘bamboozled’ by a complex system of tariffs, which have increased from 180 to more than 300 since 2008.

The ‘big six’ suppliers, comprising of British Gas, E.On Energy, EDF Energy, Npower, Scottish and Southern Energy and Scottish Power, should also face more competition, Ofgem said.

It said it would force these firms to auction off up to a fifth of the electricity they generate, making room for new companies.

Evidence has also been found that the ‘‘big six’’ energy firms ‘’have adjusted prices in response to rising costs more quickly than they reduced them when costs fell.’’

‘’Competition in the UK energy market is being stifled through complicated tariffs and a lack of transparency, and energy firms had “failed to play it straight with consumers.’’

Ofgem launched a review of the energy market after claims were made that suppliers were making excessive profits.

Earlier in the year, British Gas said operating profits had risen by 24% in 2010 to £742m.

In November, Ofgem said that energy supplier’s net profit margin per typical customer rose from £65 in September to £90 in November, a 38% rise.

Energy firms could be referred to the Competition Commission if they do not comply with the new system, Ofgem  said:  “We are also backing these reforms with a tough approach to enforcement. Consumers must have confidence that energy companies are playing fair at a time when they are being asked to foot the £200 billion bill to pay for the investment Britain needs to ensure secure and sustainable energy supplies.”

Ofgem have also announced a new investigation into Scottish Power, in addition to an ongoing investigation into British Gas, EDF Energy and Npower and into how they handle consumer’ complaints.  Investigations into miss selling by EDF Energy, Npower, Scottish Power and Scottish and Southern Energy are also continuing.