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The consumer group Which? has released a report this week which suggests that the reforms put in place by Ofgem aimed at simplifying the energy market could actually lead to increased prices for many consumers.

Tariff Comparison Rate

Ofgem have suggested a Tariff Comparison Rate (TCR) which is designed to allow a comparison of energy tariffs across the entire market. This rate is based on the medium usage of both gas and electricity  However Which? have pointed out that just 25% of energy users are considered “medium” and 75% could be advised to take on tariffs which are not suitable for them. In fact Which? say that 3.4 million households could find that they are paying a total of £55 million more than they need to.

Which? are suggesting that a single unit price for energy tariffs is a more suitable approach to ensuring that people get the lowest possible tariff. They say that the current approach could lead to low energy users losing out.

Richard Lloyd, the executive director of Which? has commented that the government should consider a single unit tariff so that it is easy to see at a single glance if a deal is good or not. He points out that this will add confidence into the market and encourage people to switch.

Misrepresentation

A spokesperson from Ofgem has said that Which? is misrepresenting the purpose of the TCR. He says that the rate is simply a tool to encourage users to look into their best rate and is similar to an APR in the loans market. It needs to be used in conjunction with personal consumption details via bills and statements to make an accurate comparison.

Ofgem say they would also like to see a “one glance” comparison and that they would like to partner with Which? to introduce an innovative approach which will see the cheapest possible market deal on every energy bill – even if it comes from a rival company.