You are in > manchester.com  > News > Ofgem: 'social tariffs must be cheapest deal'

Finance

Ofgem: 'social tariffs must be cheapest deal'

25/07/2008

Energy companies' social tariffs must equal their cheapest deals, Ofgem has said as part of the regulator's new guidelines to help fuel-poor consumers.

Following the 2008 Budget, suppliers agreed to increase their investment in social programmes to help the fuel poor – those spending more than a tenth of their income on energy - by £225 million between 2008 and 2011.

But the tariffs available to their most vulnerable customers only had to match their direct debit deal, meaning some would not be on their supplier's cheapest deal.

The new guidelines tighten the definition of a social tariff to protect these customers from paying more than they need, Ofgem said.

Ofgem spokesperson Sarah Harrison said: "Tightening the definition of a social tariff assures eligible customers that they will be on their supplier's best tariff in their area.

"This move also gives consumer advisers more confidence to recommend social tariffs.

"The range of initiatives will help in the challenge to target support effectively so that the £225 million can contribute to tackling fuel poverty."

A spokesperson for British Gas said: "We are looking at the details of the Ofgem announcement on Social Tariffs and the implications.

"British Gas introduced the first social tariff, Essentials, which makes a significant and recognised contribution to addressing fuel poverty with 350,000 accounts already benefiting from reduced prices and will cost us £34 million this year alone."

Some consumers may still be able to get a better deal by switching to another supplier, particularly if they are also able to change payment method, the regulator added.

But for customers who are unlikely or unable to switch and are eligible for a social tariff this ruling means "they can be assured they will be on their supplier's best deal," Ofgem said.

Consumer watchdog energywatch said the most progressive suppliers, notably SSE and EDFE, already offer this arrangement.

Richard Bates, policy advisor at energywatch said: "This doesn't mean that everything is resolved.

"The guidance has not addressed the confusion that fuel poor consumers can face on whether they are eligible for their suppliers' social tariff and will not ensure that all those who need such assistance are eligible for these tariffs.

"It is vital that older people in fuel poverty are helped but families with young children and people with disability or long term illness also need support.

"Substantial price increases seem imminent and households are going to be hit hard. Social tariffs can absorb some of that pain. We need them to operate to decent minimum standards and to include those who are most vulnerable."