Fuel poor tariffs 'must be cheap'

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Energy companies have been told that their social tariffs for their poorest customers must match the cheapest deals on offer.

The energy regulator Ofgem has laid down new rules in the wake of concern that vulnerable or poor customers are not being given the best offers.

Some energy firms have been giving the cheapest deals to internet customers.

However the Energy Retailers' Association (ERA) warned the changes would not end all fuel poverty.

"We welcome Ofgem's recognition of the vast range of measures that energy suppliers are putting in place to help their most vulnerable customers," said Duncan Sedgwick, chief executive of the ERA.

"This holistic approach by companies and Ofgem acknowledges that tackling fuel poverty requires more than just a "one size fits all" solution," he said.

Internet tariffs

In April, the secretary of state for business, John Hutton, arranged with the big six gas and electricity companies that they would increase the value of the discounts they gave to social tariff customers by about £225m, spread over the next three years.

This should mean lower tariffs and smaller bills for an extra 100,000 customers, if they can show they entitled to be put on a social tariff.

That would mean qualifying as "fuel poor" because they had to spend more than 10% of their incomes heating and lighting their homes, or because they were deemed vulnerable, for instance because they were long-term ill or disabled.

"Previously some suppliers' social tariffs were not as good as their internet tariffs which were the cheapest deals around," said an Ofgem spokesman.

The watchdog organisation Energywatch welcomed the new policy, but said it had not gone far enough.

"The most progressive suppliers, notably SSE and EDFE, already offer this arrangement," said Richard Bates of Energywatch.

"The guidance has not addressed the confusion that fuel poor consumers can face on whether they are eligible for their suppliers' social tariff and will not ensure that all those who need such assistance are eligible for these tariffs," he said.

Rising bills

The government has been particularly worried that with sharply rising fuel bills, caused by the rapid rise in oil prices and wholesale gas prices, many more people are now deemed to be in "fuel poverty".

Ofgem advised customers that despite the tighter rules on social tariffs it might still pay to shop around.

"Some consumers may still be able to get a better deal by switching to another supplier, particularly if they are also able to change payment method," said Ofgem.

"But for customers who are unlikely or unable to switch and are eligible for a social tariff this ruling means they can be assured they will be on their supplier's best deal," it said.