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Energy Companies Will Be Forced To Tell Customers Cheapest Tariff, Says Ofgem

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Energy suppliers will be forced to tell customers about the cheapest tariff they have on offer under proposed reforms for the industry unveiled by the energy watchdog.

Ofgem said its plans will put an end to consumers being confused by complex tariffs and will usher in a "simpler, clearer, fairer and more competitive" energy market.

The plans come after Prime Minister David Cameron backtracked on a commitment to require energy firms to give households the cheapest deals - rather than simply inform consumers what is available, as unveiled by the regulator today.

Ofgem's chief executive, Alistair Buchanan, said: "Our plans will put an end to consumers being confused by complex tariffs and will usher in a simpler, clearer, fairer and more competitive energy market for all consumers.

"I am glad to say suppliers have already responded with some initiatives, but these don’t go far enough.

"Ofgem is determined to press forward with proposals to deliver for consumers the most far-reaching shakeup of the retail energy market since competition was introduced."

It comes after Labour accused the Government of making up "policy on the hoof" amid confusion over David Cameron's vow to slash energy prices, telling reporters: "We are going to use the forthcoming legislation so that we make sure we ensure customer get the lowest tariffs."

The plan also apparently caught his own Department for Energy off guard and Lib Dem secretary of state Ed Davey made no mention of the idea at a speech in London on Thursday morning.

The watchdog also wants to introduce new tools to help consumers switch energy account.

As well as giving customers information on the cheapest tariff they can offer them, Ofgem has proposed a scheme where suppliers offer vulnerable customers and others who have not switched for some time an estimate on the cheapest tariff across the whole energy market.

In a bid to make the market "fairer", Ofgem plans to ban price increases or other changes to fixed-term tariffs.

The package of proposals will be published before the end of October alongside its non-domestic proposals.

Ofgem is legally required to go through an extensive consultation process but wants to start to introduce its reforms by summer 2013.

Consumer rights organisation Which? executive director, Richard Lloyd, said: "Along with the Prime Minister's promise to ensure suppliers put their customers on their lowest tariffs, this is another big step towards helping people get the best price for their energy.

"Our own research shows the market is far too complicated, with only one in ten people able to find the cheapest deal. These proposals will boost customer power, making it much easier to shop around, and should increase the pressure on the energy companies to keep their prices in check."

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