Energy suppliers could be forced to tell customers about cheaper tariffs available from their other brands, following new Ofgem plans.
Ofgem's proposals, which come as part of the Retail Market Review to make the energy market simpler and clearer, could mean British Gas must inform its customers about cheaper tariffs via its 'white label' firm, Sainsbury's (join our free Cheap Energy Club to get the best tariff for you).
White label providers don't hold their own supply licence, but work in partnership with a licensed supplier to offer gas or electricity under a separate brand. Another example of this is Scottish and Southern Energy (SSE), which also operates the M&S Energy brand.
Ofgem has also outlined the following plans as part of its review:
- A tariff cap. As of December last year, suppliers are only allowed to offer four core tariffs per fuel to make it easier for customers. At the time, a temporary measure was also imposed on white label suppliers created after 1 March 2013, so their tariffs were included as part of the four core tariffs offered. White labels that existed before 1 March 2013 were not subject to the cap.
However, Ofgem is now proposing to allow each white label to have its own four core tariffs per fuel as well. There won't be a limit on the number of white-labels a supplier can have.
- Cheapest tariff message. Suppliers must already inform customers via bills and other communications about the savings they could make by switching to their supplier's cheapest tariff. But under Ofgem's latest proposals, suppliers would also need to inform customers about their cheapest white label tariffs and vice versa.
All of these proposals are now open for consultation until 6 November and Ofgem hopes they'll be approved and implemented in the first half of 2015.
Its consultation states: "White labels have benefits for energy consumers, as well as limitations. On the one hand, white labels have the potential to offer distinct tariffs, provide high levels of customer service and engage different groups of consumers.
"On the other hand, white labels exert less competitive pressure on existing suppliers than new suppliers, as their pricing decisions are to some extent dependent on their partner suppliers."