Ofgem’s outline proposals on tariff reform are good but don’t go far enough. We have been practising these reforms since we launched in May last year. They are common sense and good business practice. We go much further than these reforms in our treatment of customers, giving customers a share in our profits.
Ofgem’s proposals won’t address the dysfunctional state of the market, namely that suppliers penalise loyalty in order to reward switchers. Long standing customers on suppliers’ standard tariffs pay up to £300 more than the cheapest (and temporary) deals offered to new customers. These cheapest deals are probably* priced below cost, which is anti-competitive and restricts new entrants to the market. Ofgem should have tackled this predatory and unfair pricing head on. This morning’s proposals get nowhere near that.
* This is hard to prove, which is why Ofgem should undertake an urgent investigation of tariff profitability
For our detailed response on the individual proposals in the Ofgem tariff reform package, please download this PDF file:
Response to Ofgem tariff reforms 19 10 12