Ofgem pulls plug on no-notice price hikes

Energy regulator Ofgem has today unveiled plans to up-end the way energy firms introduce price increases, putting power back in the hands of consumers. At the moment, companies have up […]

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By Kelvin Ross

Energy regulator Ofgem has today unveiled plans to up-end the way energy firms introduce price increases, putting power back in the hands of consumers.

At the moment, companies have up to 65 days in which to notify consumers after they have put up energy prices. Consumers then have 20 days to switch supplier if they wish to avoid paying the price increase.

Now Ofgem wants suppliers to give consumers 30 days warning before putting up prices.

By law, Ofgem has to consult with the suppliers over the change and the suppliers have to consent to it. Should they attempt to block it, the government has indicated it will take action to enforce the changes under the Energy Act 2010.

If unopposed, the 30-day rule could come into effect by January.

Energy secretary Chris Huhne said today: “This is a welcome step forward in getting energy companies to play fair with their customers by giving advance notice of price increases. It’s important people know about price hikes before they are charged, so they can budget. In any other business, customers know the price before they buy.”

H added: “The best result for consumers will be if energy companies don’t block the changes that Ofgem propose. But if they do, I won’t hesitate to use my powers to end for good the practice of surprise energy bill hikes, if that’s what consultation shows to be necessary.”

Mr Huhne has already warned energy companies not to block changes which would give consumers advance warning of hikes in bill.

Ofgem’s senior partner for markets, Andrew Wright, said: “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. This information makes it easier to shop around for a better energy deal and to evaluate the benefits energy efficiency measures can deliver.

“Companies should be under no illusions: 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. We intend to make sure that our current reforms stick, as our investigation of door-step selling demonstrates.”