New rules 'could stop people switching utility suppliers'
Published On 1 August 2007
The energy watchdog Ofgem has removed rules which prevent utility suppliers forcing consumers into long-term gas and electricity deals.Ofgem said that the move would encourage utility suppliers to invest in energy efficiency measures and install smart meters in consumers' homes.
Previously, rules meant that utility companies could only force a customer to stay for a month before switching to a new supplier.
Utility companies argued that this made it impossible for them to pay for the installation of greener systems, as they had no guarantee a customer would stay with them for an extended period of time.
Ofgem chief executive Alistair Buchanan explained: "We have fixed in place protection to ensure that vulnerable customers are well served by the market while clearing the decks to allow innovation. We look now to the companies to respond."
However, consumer groups expressed concern that the new rules would allow utility suppliers to tie consumers into long-term expensive plans.
Karen Darby, founder of SimplySwitch.com, commented: "From a consumer's perspective this is a worrying move by Ofgem.
"Switching suppliers has led to the competitive market that we enjoy today and any move that leads to onerous contract conditions is unwelcome. We've seen in other markets contracts of 18 months and more introduced and this inhibits people's ability to find a better deal."
