Energy watchdog's report "a step in the right direction"

27/03/2009

Ofgem's plans to regularise energy costs through the introduction of new rules for providers have been welcomed by Consumer Focus.

The consumer campaigns group said that the watchdog's announcement this week was a "step in the right direction".

However, Consumer Focus also pointed out that Ofgem's report contained recommendations for action that would be consulted on, rather than concrete rules.

The report showed that the typical customer on a prepayment meter paid an extra £90 per year compared to a customer who bought their gas and electricity via Direct Debit.

For those who paid by cash or cheque, this gap was £80.

The watchdog's report also recommended that there should be greater financial transparency among providers and simpler promotional material showing cost differences between different tariffs.

Robert Hammond, energy specialist for Consumer Focus, said: "The Ofgem press release has made all the right noises, there are lots of good words there.

"Certainly this is a step in the right direction… Let's see good words turn into good deeds sooner rather than later."

Kevin Still, EuroDebt director, commented: "This follows on from the Which? Report indicating that many consumers have overpaid on the energy budget plans and were ‘in credit’ by upwards of £80. Whilst there are arguments for offering more attractive tariffs for payment by electronic methods, it is often those that are in financial difficulty that are excluded and have a payment meter imposed upon them, sometimes because of the payment performance of previous occupants."

He added: "If there is a surplus on the account then get it credited and look for a different provider with a tariff that you are eligible for. Setting up a basic bank account or using a pre-paid card over the Internet may prove more cost effective to take advantage of these differentials purely on payment method."

Ofgem is due to set its new rules later in the year.

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