Confused.com Comment on Ofgem's Four Possible Solutions for Tackling Unfair Energy Pricing

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"Ofgem is clearly stating how serious it is about tackling unfair price differentials between payment methods."

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Ofgem has shown that it is serious about tackling unfair energy pricing in the UK. The consultation paper, published on the 8th January, follows Ofgem's 2008 findings that unfair energy pricing affects a significant number of UK consumers, many of whom are considered 'vulnerable'.

Gareth Kloet, energy comparison expert at Confused.com, has commented on Ofgem's recent proposals to tackle unfair energy prices:

"Ofgem has shown that it is serious about tackling unfair energy pricing in the UK. The consultation paper, published on the 8th January, follows Ofgem's 2008 findings that unfair energy pricing affects a significant number of UK consumers, many of whom are considered 'vulnerable'."

The Ofgem consultation paper includes four proposed measures which would force energy suppliers to tackle the issue of unfair pricing:

Proposal A: Suppliers will be unable to charge more unless there is a reason to do so. This is in view of the additional costs prepayment meter and cash settlement customers have to pay.

Proposal B: Goes further than proposal A by including price differentials caused by any discrimination that is not "cost reflective". This would allow Ofgem to tackle all unfair pricing, both in terms of payment method and also regional differences in best price tariffs.

Proposal C: Is an 'instead of' proposal B. This proposal suggests the introduction of relative price controls on energy prices based on set criteria. This would prevent suppliers from applying 'extra' charges; for instance for being in a different region or using a different payment method.

Proposal D: This proposal seeks to prevent suppliers from making a higher profit margin from electricity than gas, proportionately. Whilst there are justified reasons for suppliers doing this it does mean that households, such as flats, which can only receive electricity, are disproportionately affected.

"This is a consultation document, so it is difficult to say at this stage what the preferred proposal will be or indeed to what extent these proposals may change during the consultation process. What is important, however, is that with the publication of this paper Ofgem is clearly stating how serious it is about tackling unfair price differentials between payment methods."

"For consumers who pay on receipt of their bill, or use a prepayment meter, such measures should reduce the cost of their energy bills."

"Unfortunately consumers who pay on receipt of their bill or use a prepayment meter are often the 'fuel poor' and as such more unlikely to be able to pay their bills regardless of a price decrease. The affect of this will be that suppliers unable to make sufficient profit from these customers to pay for the additional administration that they require (such as debt management) could increase prices for Direct Debit customers to make up the shortfall."

For further information please contact:
Press office, Confused.com. 02920 434 398
Joanna Harte/ Karen Wagg Polhill Communications 020 7655 0550

Notes to editors
About Confused.com:
Confused.com is one of the UK's biggest and most popular price comparison services. Launched in 2002, it generates over one million quotes per month. It has expanded its range of comparison products over the last couple of years to include home insurance, travel insurance, pet insurance, van insurance, motorbike insurance, breakdown cover and energy, as well as financial services products including credit cards, loans, mortgages and life insurance.

Confused.com has all of the 'big six' energy providers on its panel, customers can save £284* on their annual energy bill by switching with Confused.com

Confused.com is not a supplier, insurance company or broker. It provides a free, objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com's service is based on the most up-to-date information provided by UK suppliers and industry regulators.

Confused.com is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is regulated by the FSA.

*20% of customers saved £284 when switching with Confused.com between January and June 2008

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Caroline Spindlove
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