Ofgem aims to end default energy tariffs

New measures to help move customers to better value deals at the end of their contract have been announced. Ofgem aims to ensure customers are free to switch if they […]

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By Priyanka Shrestha

New measures to help move customers to better value deals at the end of their contract have been announced.

Ofgem aims to ensure customers are free to switch if they choose to do so at the end of their fixed-term contracts and are not locked in with termination fees that may be poor value.

It has decided to allow suppliers, at the end of a fixed-term contract, “to roll a customer that has not made an active choice onto a further fixed-term tariff”.

The new tariff should not have any penalties for early termination, should be the same price or cheaper than the variable tariff than the customer would otherwise have been rolled onto and should be similar in nature to the customer’s current tariff. That’s in respect to tariff type, online account management, meter type and payment method.

The regulator believes these changes will provide room for suppliers to differentiate themselves and put their customers on to better deals.

Neil Barnes, Associate Partner, Consumers and Competition said: “This decision does not require suppliers to change their default contracts for customers at the end of fixed-term tariffs. But we strongly encourage them to take advantage of the extra flexibility our decision provides and to make changes where it is in their customers’ interest to do so.

“Suppliers need to do more to get all their customers, particularly those on poor value standard variable tariffs, a better deal.”

The news comes as the government recently published a draft bill to put a cap on energy prices.