Making an electricity price comparison has seemingly always been a difficult task. There are so many different options for providers alone, and on top of that, each individual company seems to have an infinite number of tariffs.
Recently, consumers throughout the U.K. were having so much trouble making sense of all the different options that the government was forced to step in. Ofgem, the national energy regulator, pushed forward a bill in early 2013 that limits the number of different tariffs each energy company can offer to four. According to The Guardian, the bill was backed by Prime Minister David Cameron and will roll out in phases. It is scheduled to be entirely implemented by this winter.
The benefits of the new bill will be felt by everyone in the market for the cheapest possible energy plan. Each company will be allowed to offer four tariff options per fuel type they offer, so most will have four tariffs for gas and another four for electricity.
Of these four tariffs, one must be a standard (also known as “variable”) rate. The rates under this tariff are allowed to fluctuate with the current prices of energy as set by the provider. The other three tariffs can be any combination of fixed rate, green rate, and online rate.
Consumers will soon find it much easier to find the cheapest gas and electricity prices available from each company because another section of the reform requires energy providers to make the cheapest option as transparent as possible. This transparency will be provided by a new rate, known as the Tariff Comparison Rate or “TCR”, which will function much like the APR does for credit cards and mortgage loans. Consumers will be able to compare prices using this common number so they are no longer confused about which rates are the best deals.
For those customers who have been with the same energy company for many years as well as customers who are deemed “vulnerable,” the bill will go a step further to ensure that no one is being taken advantage of.
These customers can apply for a personalized rate comparison that will let them know what the cheapest rate would be from among all the major energy companies. Since these groups are the least likely to do a lot of research into finding the best deal, they are often the ones who end up paying most. The new reform will require cooperation from all of the major providers to help this group save as much money as possible and find the cheapest options for gas and electricity.
Other portions of the reform include a mandate to protect those customers currently enrolled in a fixed-rate tariff. Whereas in the past, many consumers found themselves being automatically rolled over to a new contract when their current fixed-rate tariff expired, the new bill forbids this practice from happening without your permission. It also further protects fixed-rate customers from hidden fees and price increases. Consumers will continue to receive bundle discounts if they purchase both gas and electricity from the same provider despite the new tariff rules. Every portion of the bill is meant to help you get a better value for your money when it comes to paying for these utilities.
So what will the new law mean for you when you are in the process of trying to find the best deal on energy? Simply put, you won’t have to work anywhere near as hard when doing your research. While the “big six” energy companies used to have hundreds of possible tariffs between them, after the new rules start, they will have to narrow it down to a grand total of 24 tariff options (48 if you count those for gas as well). With so few overall rate options, and with the added benefit that each company must clearly present all four options, you will be able to easily look at all the possibilities and make an informed decision based on your personal finances. By doing all that it can to eliminate the loopholes and tricks that many consumers face when doing an electricity price comparison, the new reform seeks to make the whole experience much easier for you while ensuring that you get the best possible prices.
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