More than 1300 energy tariffs to ‘flood’ energy market, warns First Utility

First Utility has warned of mass confusion for consumers as Ofgem officially removes its four-tariff rule this week.

The independent supplier predicted that the market could be flooded with more than 1300 tariffs – adding more complexity and disengagement within the market.

The Competition and Markets Authority (CMA) recommended that Ofgem remove the four-tariff restriction which was part of a package of reforms to the energy market implemented by the regulator. The CMA released its final report in June and Ofgem will be officially removing the rule this week.

First Utility calculated the number of tariffs based on the average number per energy supplier in 2011 before Ofgem introduced the limit. At the time there were 400 tariffs available from 13 suppliers – an average of 31 per supplier. Currently there are 873 tariffs (an average of 20 per supplier), but First Utility claims that this could increase to an average of 31 tariffs for each of the 43 suppliers, totaling 1364.

First Utility UK managing director Ed Kamm said: “The CMA had a golden opportunity to make things fairer and simpler for all consumers. But their remedies do nothing to resolve what has become a ‘Tale of two markets’ – divided between those who shop around for the best deals and save hundreds, and the disengaged or vulnerable who remain on the most expensive tariffs.

“The prospect of returning to the bad old days of confusion marketing, without any requirement to explain these tariffs in a way that makes sense to consumers, is hugely concerning. Why should customers be expected to wade through more than a thousand baffling options? This makes it harder for consumers to find and compare the best deals.”

First Utility has reiterated its calls for government to intervene in the energy market to help the disengaged from being further confused and overcharged.