Reforms aim to get consumers a better deal from energy suppliers

OFGEM is pushing ahead with reforms that will make it easier for people who switch their energy supplier to get a better deal while protecting those who don’t from being charged too much.

In the next few weeks the regulator will launch a trial of a simplified collective switch, aimed at consumers on the worst deals who have not switched for more than three years.

Organisers of collective switches help large groups of consumers to save money by negotiating a good deal with a supplier on their behalf.

In Ofgem’s trial, around 50,000 of a large supplier’s disengaged customers will be offered a better deal which the consumer partner appointed to organise the collective switch has negotiated.

Unlike other collective switches, these customers will not need to enter their existing tariff details for their personal savings from switching to be calculated, making it easier to take part.

Depending on the outcome of the trial, Ofgem could roll out simplified collective switches for more customers.

Ofgem is also launching a new trial involving over 250,000 customers on expensive deals who will receive up to two letters or emails from their supplier telling them about three available cheaper deals, including from rivals.

This follows the success of a similar smaller trial run by Ofgem last year which resulted in a trebling of switching rates.

The reforms are part of the regulator’s plans to deliver a more competitive, fairer and smarter energy market for all consumers.

Earlier this month, Ofgem extended its prepayment safeguard tariff to almost one million vulnerable households to protect them from overpaying for their energy.

Ofgem is also working with the Government to protect all customers on poor-value default deals, such as standard variable tariffs, with a wider price cap as soon as possible.

Customers who are protected will be able to save even more money by switching to a cheaper deal.

They might also want to switch to benefit from a range of new “smart” or digital products and services coming on to the market.

Ofgem has also given the goahead to a programme which will allow people to switch by the end of the next working day and reduce the number of switches which go wrong.

According to Ofgem’s latest figures, overall domestic switching rates are at a record high, which shows that more people are engaging in the market. Last year, 18% of electricity and 19% of gas customers switched supplier, the highest switching rates since 2009 for electricity and 2008 for gas.

However, around 57% of households remain on poor-value standard variable tariffs which are not covered by the safeguard tariff.

Rob Salter-Church, interim senior partner for consumers and competition, said: “Ofgem is committed to getting all consumers a better energy deal.

“We will protect consumers who don’t switch from being charged too much while we put in place the building blocks for a more competitive market.

“In the long term, we believe that competition, combined with protection for those who need it, is the best way to deliver the best energy deal for all consumers.”