Ofgem’s Retail Market Review (RMR) plans to simplify the number energy tariffs available to consumers are being threatened by standing charges, according to Uswitch.com.
The RMR’s proposals have abolished the two-tier charging rates in favour of a single rate for all usage and allow a standing charge to be set, but Ofgem have warned that suppliers could introduce a “plethora” of standing charges which could leave “consumers facing a bewildering maze of charges”.
At the moment, energy consumers have a choice of 45 standing charges, with EDF Energy being the only of the big six who offer a single standing charge across tariffs and payment schemes.
British Gas is due to reduce down from eight to one standing charge by the end of the year.
There are a large difference between many of the standing charges with the difference between the cheapest and the largest being a whopping £68.
Ann Robinson, director of consumer policy at Uswitch.com, said: “With standing charges we are in danger of seeing one layer of complexity being replaced by another.”
She added: “There is a warning here for Ofgem too – it has one shot at getting this market right for consumers, which is why it must keep a close watch on standing charges to ensure that complexity isn’t allowed to creep back in.
“Failure to remove complexity could see its vision for the competitive market derailed once-and-for-all.”
An Ofgem spokesperson said that the RMR proposals will ensure that all tariffs have the same structure, a standing charge with a single unit rate, with confusing multi- tiered charges being banned as they confuse customers.
“These reforms, which also include other ways of simplifying energy tariffs by limiting suppliers to offering a maximum of four core tariffs per fuel, will make it far easier for customers to compare deals across the market.”