Government to spell out cheap energy plan

After weeks of confusion about the Government's plans to simplify the market and reduce bills for hard-pressed families, the Liberal Democrat is expected to use an appearance before the Energy Select Committee to set out more detail.

Key Points

• Government energy plans to be announced today

• Cameron threw energy policy into confusion last month

• Said firms would have to give cheapest tariff to all

It's thought energy firms may be prevented from offering more than four tariffs, and will also be required to automatically move customers onto the cheapest one.

Prime Minister David Cameron plunged energy policy into confusion last month by telling MPs the Government would legislate so gas and electricity companies "have to give the lowest tariff to their customers" (see the Energy firms to offer cheapest deals MSE News story).

Davey, however, appeared to distance himself from the proposal, while No 10 said energy firms would be obliged only to "offer" the cheapest tariffs.

Energy regulator Ofgem also announced plans to force suppliers to offer their cheapest tariff to customers. But Ofgem said firms would only be required to tell customers about their best deals, rather than be forced to actually give them to consumers.

Martin Lewis, MoneySavingExpert.com founder, says: "Energy privatisation and competition has failed from a consumer perspective. It's broken and needs fixing.

"Don't wait for the Government – many are overpaying £300 a year NOW on energy bills. For easy info to fix this, see the Cheap Gas & Electricity guide."

Households want simpler tariffs

Today's announcement comes amid long-standing concerns that many households are paying hundreds of pounds a year more than is necessary for gas and electricity, because of the confusing array of different tariffs.

In a poll on MoneySavingExpert.com last year, the majority of users who voted said they would prefer one flat rate per company, even if this led to higher prices on cheap deals.

The issue has become more acute in recent years because of rising wholesale prices which have been passed on to customers.

Only last week, British Gas became the latest of the big six energy providers to up costs this winter. Five of the big six providers have announced price hikes of up to 11% in recent weeks.

The sixth, Eon, only guarantees a price freeze until the end of the year, and is expected to raise costs in January.