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Statement from Co-operative Energy on Ofgem plans for tariff simplification

Posted on 28 March 2013

Nigel Mason of Co-operative Energy says:

“Ofgem’s intentions for tariff reform are positive but their final proposals - released yesterday - don’t go nearly far enough. They won’t have any lasting impact on fairness and transparency, we believe. Pressure on Ofgem from the big suppliers has resulted in many of the market’s complex practices being allowed to continue. Although the four tariff cap remains, there will still be at least 72 tariff options per supplier, and a number of worrying new loopholes have opened up.

“For example, suppliers will be able to create an unlimited number of special tariffs just for collective switching schemes, plus any tariffs created for ‘white label’ arrangements will be allowed to continue outside the cap. There are also allowances for ‘bundled offerings’.

“Far from simplifying the market for consumers, these final proposals preserve the current complexity. In fact, they go as far as to enshrine the current complexity in a new rule-book.

“Collective switching is of great interest to us if it succeeds in reaching consumers who were previously disengaged. We don’t think collective switching should be about spiriting up special deals for privileged groups of already active consumers. So we find the collective switching loophole an area of great concern. Consumers who are engaged enough to participate in the schemes could benefit to the detriment of suppliers’ core customer s.

“We fully expect this loophole to be heavily exploited by new promoters of collective switching schemes, not all of whom will have sound motives. We think intermediaries will proliferate, which is usually bad news for consumers. Intermediaries tend to put their own interests ahead of the consumer’s, which is why they need regulating, as Ofgem now recognises. This all suggests the market is becoming more complex, not less so.

“We didn’t think the original proposals went far enough so we are disappointed that these final proposals water down an already weak framework.”

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