Plan to end energy bill loophole
BBC News
Various changes to consumers' bills have been introduced by Ofgem Customers could be told in advance about energy price rises rather than notification up to two months after the event.
Current rules mean suppliers can wait for 65 working days after prices have been put up to tell their customers.But under plans published by regulator Ofgem, companies would have to give customers 30 calendar days' warning before putting prices up.
It said the timescale would allow people to shop around for deals.
If the proposals are accepted by the energy companies, they could come into effect by January 2011.
Switching An Ofgem inquiry into the domestic energy market found that the 65-day statutory deadline was supposed to be a backstop.
After notice was given, customers had 20 days to switch supplier if they wanted to avoid paying the increased price. Under the new plans, they could now do this before the rise came into effect.
"A month's notice of price increases, along with annual energy statements and better information on bills, will empower consumers by giving them the facts about how much their energy costs," said Andrew Wright, Ofgem's senior partner for markets.
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End Quote Andrew Wright OfgemWe will not hesitate to bring forward further measures to protect consumers if the evidence shows them to be necessary”
"This information makes it easier to shop around for a better energy deal and to evaluate the benefits energy efficiency measures can deliver.
"We will continue to keep the effectiveness of the energy market under review and will not hesitate to bring forward further measures to protect consumers if the evidence shows them to be necessary."The Liberal Democrats first raised the issue of the 65-day rule in January, and the Labour government then vowed to reduce the delay to 10 days.
The coalition government has since said it will change the rules, with the issue raised again at the Liberal Democrat conference last week.
Now Ofgem has gone further by proposing that consumers are told of price rises in advance.
Industry watchdog Consumer Focus welcomed the plans.
"If people's energy bills are going to go up, of course they [customers] should be told in advance, not up to two months later," said Audrey Gallacher, the watchdog's head of energy policy.
"By knowing about price rises, people can budget for them and look to switch to a cheaper deal. The next step is for Ofgem to tackle the confusing array of energy tariffs consumers have to battle with. It should also address problems with rollover contracts, where people can be unwittingly tied into long deals with expensive get out clauses."
Other changes to bills made recently by Ofgem included the introduction of annual energy statements, allowing people to compare tariffs more confidently, and stricter rules on doorstep sales.
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