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Banning "unjustified" prices

Ofgem found that customers on pre-pay meters were paying considerably more for their energy than customers who paid by direct debit.

The watchdog’s proposals mean that prices for gas and electricity must reflect costs to the supplier. This means that rather than being penalised, pre-payment customers’ extra charges will be limited to how much more their meter costs to run. Ofgem is making it a condition of their licence that suppliers ban unjustified price differences.

Energy and Climate Change Secretary Ed Miliband said: "The overcharging of some of the most vulnerable customers exposed in the Ofgem probe was inexcusable.

"That is why it is right that Ofgem is acting to ensure that wherever you live and whatever payment method you use, you will not be unfairly discriminated against."

Greater protection for customers

Under the new rules energy suppliers must provide their customers with:

• a standard annual statement covering, the tariff name, the customer’s consumption and a reminder of the customer’s right to switch
  
• simplified information on tariffs to make comparison easier including an at-a-glance price score card to help consumers in switching
  
• written quotations following doorstep sales and, for prepayment meter customers, proof that the offer made on the doorstep is better than the customer’s existing deal
  
• greater clarity to give consumers confidence that the market is competitive and fair

Under the new rules suppliers must treat customers fairly. This obligation will be strengthened in a new set of standards that suppliers will be expected to meet.

Ofgem hopes that these will include:

• not selling a customer a product or service that they do not fully understand or that is inappropriate for their needs and circumstances
  
• not changing anything about a customer’s product or service without clearly explaining why
  
• not preventing a customer from switching product or supplier without good reason
  
• not offering products that are unnecessarily complex or confusing
  
• making it easy for customers to contact their supplier and act promptly and courteously to put things right when the supplier makes a mistake

Ed Miliband added: "Ofgem's new proposals on doorstep selling and SME contracts are good news for householders and firms trying in difficult times to make the best sense of the choices available."

• Energy Efficiency grants

• Insulation and heating

• Help with heating your home

• Office of Gas and Electricity Markets (Ofgem) Opens new window