Radical reforms for a simpler, more competitive energy market

Ofgem welcomes recent indications from some suppliers about the importance of restoring consumer confidence and looks to suppliers to get behind its reforms.

Simple tariffs, clearer bills and annual statements will be the result of the radical reform model proposed by energy regulator Ofgem.

After extensive analysis, Ofgem has decided to progress its preferred model for the reform of the retail energy market. It has also published today its latest report on prices which shows that the average dual fuel bill now stands at £1,345 and, following recent price rises, estimated suppliers' margins have peaked at around £125 per year, but are likely to fall back next year. This report on prices does nothing to alter Ofgem's findings in March that competition is being stifled by a combination of tariff complexity, poor supplier behaviour and lack of transparency and that radical change is needed.

Today's consultation is the first of four waves of reform:

In November detailed proposals to reform the energy market to help the businesses sector

In December further decisions on proposals on liquidity to break the stranglehold of the Big Six in the wholesale electricity market

In the New Year the findings of an independent report into making energy company accounts more transparent.

Ofgem's Chief Executive Alistair Buchanan said: "When consumers face energy bills at around £1,345 they must have complete confidence that this price is set by companies competing in a fully competitive market. At the moment that is not the case.

"That is why a radical break with the past is needed. Ofgem's tariff reforms offer the quickest way to create a market where consumers can have confidence that prices are set by effective competition. Suppliers have told Ofgem they want to restore confidence in the industry and now they have the chance to do so.

"With £200 billion of investment needed to overhaul Britain's energy industry and the pressure this and rising energy prices puts on bills, consumers rightly demand a major improvement in the way suppliers behave towards them."