Critics blast energy tariffs plan

GOVERNMENT plans to ensure all households are on the cheapest gas and electricity tariffs available have come under attack amid concerns that they could push up energy bills.

After weeks of confusion about plans by the Government to simplify the market and reduce bills for hard-pressed families, Liberal Democrat Energy Secretary Ed Davey is set to announce details on how ministers aim to help households cut costs.

Energy firms could be prevented from offering more than four tariffs and be required to automatically move customers on to the cheapest one.

The move comes amid long-standing concerns that many households are paying hundreds of pounds a year more than is necessary for gas and electricity because of the confusing array of different tariffs. The issue has become more acute in recent years because of rising wholesale prices that have been passed on to customers.

The proposals are being published after the Prime Minister plunged energy policy into confusion last month with a surprise announcement in the Commons that the Government would legislate so that gas and electricity companies "have to give the lowest tariff to their customers".

But the backlash against the plans began before they were even officially announced, with opponents warning the measures, which are due to be included in the forthcoming Energy Bill, will still not give households a good deal.

Shadow energy and climate change secretary Caroline Flint said: "The cheapest deal in an uncompetitive market will still not be a good deal.

"Unless David Cameron stands up to vested interests in the energy market and creates a tough new watchdog with powers to force energy companies to pass on price cuts, his warm words will be cold comfort to people worried about paying their fuel bill this winter."

Guy Newey, head of energy and environment at centre-right think-tank Policy Exchange, said: "Cutting the number of tariffs and forcing energy companies to put households on the 'best' rate could end cheap deals. This risks punishing families who do the right thing and shop around. There is a danger this move could see fewer people switching, reduce competition and therefore push up bills in the long term."

And price comparison website Confused.com warned that as larger numbers of consumers were switched to the cheaper tariffs, those rates were likely to increase in price to cover costs of supply.

© Press Association 2012

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