Ofgem's tariff reform

CITY ScottishPower
The regulator Ofgem is requiring energy companies to simplify their tariff structure. Photograph: Andrew Milligan/EMPICS

Ofgem's decision requiring suppliers to introduce standing charges for all energy tariffs is not a "disastrous setback" for fuel poverty as claimed by Anne Thomas of the Highlands and Islands Green party (Letters, 30 August).

Prior to our reforms, suppliers could structure their tariffs in various ways. Some had standing charges, others had complex multi-tier tariffs where consumers were charged a rate that fell the more they used. As a result it was hard for consumers to make meaningful comparisons between offers. So, to deliver the simplicity we know consumers want, we are requiring suppliers to have only one structure for tariffs – a standing charge with a unit rate. This will make comparisons far easier.

A standing charge is just a way of recovering overheads that are unrelated to energy use. However, there is nothing in our reforms that stops suppliers setting the standing charge at zero. Some suppliers are doing this, and if there is consumer demand for such tariffs we would expect this to continue.
Maxine Frerk
Partner, retail markets and research, Ofgem