Business

Energy bills: 30-day notice for price rises

Oven
Image caption The move comes as Ofgem consults on plans for clearer billing

Consumers must now be told about energy price rises 30 days in advance, rather than being notified up to two months after the event.

The changes made by regulator Ofgem strip away previous rules that meant suppliers had 65 working days after prices had risen to tell customers.

The rule also covers any change to a contract that leaves a customer significantly worse off.

The changes came into force on Thursday.

'Fairer deal'

The 65-day statutory deadline was supposed to be in place so people were made aware prices had changed, rather than having to study their bills.

After notice was given, customers had 20 days to switch supplier if they wanted to avoid paying the increased price. Under the new rules, they can now do this before the rise comes into effect.

"Ofgem is determined to ensure that supply companies play it straight with consumers. Giving customers advance warning of price rises is one way of ensuring a fairer deal for them," said Andrew Wright, Ofgem's senior partner for markets.

Campaigners said that the move was overdue.

"It is absurd that providers have been able to announce price rises retrospectively," said Mark Todd, director of energyhelpline.com.

"Imagine going to a supermarket and being charged £90 for groceries and then being told three months later that actually the price was £100 and that they now wanted an extra £10. There would be uproar."

Hannah Mummery, of watchdog Consumer Focus, said: "The challenge now is for energy firms to deliver the changes needed to make switching work for consumers and give them confidence that they are being asked to pay a fair price. The regulator must keep the pressure on until they do."

Industry view

Energy UK, which represents the major UK suppliers, said customers were already getting advance notice of changes, before the rules came into effect.

"In the last six months, the leading energy companies have all provided advance notice to customers of their price changes, going beyond the legal requirement at the time," said Energy UK director Christine McGourty.

"A priority now is to ensure that mailings to millions of homes can be managed effectively to ensure the best possible service for customers."

The Liberal Democrats first raised the issue of the 65-day rule in January 2010, and the Labour government then vowed to reduce the delay to 10 days. The coalition government said it would change the rules after coming into power. However, the regulator went further than any of the parties suggested.

Following a recent review of the UK energy market, Ofgem told energy firms they must offer simpler tariffs to help consumers compare prices.

The regulator said that customers were "bamboozled" by a complex system of tariffs, which have increased from 180 to more than 300 since 2008.

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