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Big Six to be forced to give consumers cheapest tariffs

The Government is today explaining how it is following up on Prime Minister David Cameron’s shock promise to make energy companies put consumers on their cheapest tariff.

Last month, Cameron told MPs at Prime Minister’s Questions that energy firms would be compelled to make the change, which came as a surprise to DECC and its ministers, as well as the industry. He said: “We will be legislating so that energy companies have to give the lowest tariff to their customers.”

Some commentators assumed he was speaking off-the-cuff, or had mis-spoken.

But today energy secretary Ed Davey is to announce the details of a new plan at a meeting of the energy select committee and, if necessary, new laws will be included in the new energy legislation, due to be published in the next fortnight.

The announcement followed a report by Ofgem which proposed reform to reduce confusion in energy tariffs, by reducing the number of available tariffs to four (such as a fixed tariff, a green tariff, a variable tariff and an Economy 7 type tariff), requiring the ‘Big Six’ energy firms to show their cheapest tariffs on energy bills and banning complex multi-tier tariffs.

Energy companies have opposed the plans, and critics argue that the move to place all consumers on their lowest available tariff would result in all tariffs being pushed up, as it will destroy any incentive among the Big Six to bother competing on price.

The scheme could be in force by 2014.

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