CMA to consider ending evergreen tariffs

The Competition and Markets Authority (CMA) has opened a consultation on moving to fixed-term contracts as a remedy for increasing consumer engagement in the energy market.

The CMA said it was launching the consultation after both Scottish Power and British Gas’ parent company Centrica proposed similar ideas around phasing out “evergreen” tariffs and instead moving all consumers to fixed-term contracts.

Scottish Power and Centrica proposed the idea of ending evergreen tariffs as an alternative to the CMA’s proposed transitional “safeguard tariff”. But the CMA said it was instead considering the move to fixed-term contracts as a measure to prompt customers on standard variable tariffs to engage in the market.

Consumers would be encouraged to engage in the energy market via end of fixed-term contract notifications.

Both suppliers said in their experience domestic customers on fixed-term contracts engaged in “significant numbers” following the receipt of an end of contract notification from their supplier, much higher than for the receipt of an annual statement or price increase notification.

The big six energy suppliers have criticised the CMA’s proposed safeguard tariff as being “disproportionate” to the actual levels of disengagement they say exist in the energy market.

The consultation closes on 9 November.