Energy tariff hope for the poorest

The Government is proposing to order energy providers to streamline their tariffs to ensure that customers are getting the most economical rates.

Energy Secretary Ed Davey revealed details of the plan, to be announced on Tuesday afternoon, which could help struggling families cut down on household costs.

It is expected that the proposed move will require energy providers to supply no more than four tariffs, and may oblige them to switch all customers directly to the cheapest rate.

The proposal was prompted by continued fears that many people are paying unnecessarily high bills - sometimes by hundreds of pounds a year - due to having chosen the wrong tariff.

The problem has been compounded in recent times by a rise in wholesale prices which has resulted in higher rates.

Last month, David Cameron gave the unexpected news in the Commons that the Government could force energy firms to give customers the most advantageous rates.

Mr Davey did not go as far and said that energy companies would only have to make the cheaper rates available.

Energy Minister John Hayes revealed that several plans were being weighed up, including the option of having providers make a voluntary commitment to assigning the cheapest tariff.

Energy industry emphasising move may reduce choice 

The uncertainty was met with frustration from firm executives who were against a move which could affect the ability of companies to compete.

Energy UK chief executive Angela Knight, argued that Government's plans could mean that special offers on gas and electricity are no longer possible.

'What it will do is potentially remove some choice away from people and certainly some deals that people get at the moment,' she told BBC Radio 4's Today programme.

'Certainly it is the case that if you have restrictions and constraints, then you can't offer everything and you can't offer the variety of choice that you get at the moment.'

Responding to today's expected announcement on energy tariffs, Age UK Charity Director General, Michelle Mitchell, said:

'Staying warm over the cold winter months is vitally important for older people, so anything which simplifies energy tariffs and makes it easier to find the best deal is welcome.

'In the longer term, to help households reduce their fuel bills and get the most from the energy they use, the Government needs to substantially invest in making every home in the UK as energy efficient as possible.'

Copyright Press Association 2012