Ofgem warns Energy firms of declaring social tariffs

An energy regulator has warned energy firms not to make claims of helping poor customers, slapped by soaring bills, unless their “social tariffs” are the best deals they offer.

The energy watchdog, Ofgem, announced that none of the six major British energy suppliers had a policy that was consistent with their guidelines, released on Friday. In addition, the regulator said the “Essentials” tariff brought about by British Gas was especially short of the required standards.

Ofgem’s guidelines attempt to spell out what it is that energy firms must do to satisfy the requirements to spend 225 million pounds on reducing fuel poverty in the next three years. The regulator warned that although subsidies offered to poorer customers do count toward their allotted target, the company may only claim the subsidy as a social tariff if it their cheapest offer.

Consumer advocates have long been critical of energy companies who claim to assist the “fuel poor” - this category of consumers spend more than 10% of their income on energy bills. These companies tend to make more money from customers than from those who signed up for better deals online, say reports.

According to statistics, rising energy bills translate into 4.5 million households that are “fuel poor.” This number is expected to rise again as another round of increases are forthcoming.

Centrica, owner of British Gas, commented that it was scrutinizing the details of Ofgem’s guidelines and the allegations of the “Essentials” tariff. British Gas said in a statement, that it introduced the first social tariff called Essentials, which will cost the company 34 million this year.

For more, please visit www.ofgem.gov.uk