Customers were dealt good news today following a pledge by Ofgem, the energy regulator to review how quickly energy suppliers tell them about their price rises.
The news could help millions of households because they will be notified sooner about rises to their gas and electricity prices. The current regulations allow energy suppliers to wait up to 65 working days before notifying customers of price changes, but Ofgem is proposing this be cut to just 10 days.
Although any new regulations will not come into affect until at least the end of the year, they have been welcomed by consumer groups who have campaigned for a reform to protect customers. Peter Vicary-Smith of consumer group Which? said, ‘We’re pleased that the Government agree with us that the current rules are completely unfair on consumers. It’s outrageous that energy suppliers can keep their customers in the dark over a price hike for so long.’
The government has backed the plan, by amending its Energy Bill last week. The change gives it the authority to change the notification period, unless Ofgem sorts it out first. Vicary-Smith added, ‘It’s vital that this amendment is kept in the Bill and that the Government uses it to force suppliers to give advance warning of any price changes. Ofgem must act now and amend the license condition so that consumers don’t have to wait.’
The 65 day notice period was described by Ofgem as a ‘backstop’ following its recent review of the energy market. It said informing customers as soon as possible was always the preferred option by suppliers. Where customers were informed after the price had increased, suppliers would need to give 20 days for them to switch without being penalized.
Representing energy suppliers, Christine McGourty of Energy UK said energy companies usually inform their customers before their prices rise. She said, ‘Most customers are advised of a price change within weeks, but the 65-day notice period allows companies to communicate with all customers in the most cost-effective way – via their bill.’ She added, ‘If customers are not happy for any reason, they always have the option to switch supplier or tariff to avoid any unwanted price changes.’
Joan Ruddock, energy and climate change minister said, ‘Energy companies have got to be fair to customers, and if they are not and if Ofgem cannot fix it, then we will.’
Sources:
http://news.bbc.co.uk/1/hi/business/8516728.stm
http://www.energyhelpline.com/news/article.aspx?aaid=19617742&y=2010&m=2&w=3&pid=1
http://www.which.co.uk/news/2010/02/energy-customers-set-to-get-price-rise-warnings-203775
