Call for more notice of energy bill rises

Gas and electricity suppliers should be required to give 30 days' warning before putting up prices, the UK energy watchdog said today.

Ofgem said it wanted to reverse current rules that allow energy firms up to 65 days to notify households after they have put up prices.

It hopes the change - which could come into force next January - will "empower" consumers.

The move would also bring to an end the practice for suppliers to enforce bill hikes immediately, while price cuts are often delayed by weeks.

Andrew Wright, Ofgem's senior partner for markets, said: "A month's notice of price increases, along with annual energy statements and better information on bills, will empower consumers by giving them the facts about how much their energy costs.

"This information makes it easier to shop around for a better energy deal and to evaluate the benefits energy-efficiency measures can deliver."

Households are braced for a winter of energy price rises after a report from Ofgem yesterday warned that suppliers were seeing big rises in wholesale costs, which are eating into their profits.

The watchdog expects wholesale prices to increase by 13% by next spring, which, if passed on in full, would see annual gas bills surge by around £81 to £706.

EDF recently announced it was putting up its electricity prices for 1.2 million customers.

Today's proposal for 30 days' notice of an increase follows anger in recent years at energy company behaviour.

During 2008's energy price misery, the industry inflicted a series of tariff increases often at little notice.

E.ON and Scottish Power, for example, both announced double- digit increases in gas and electricity prices in February 2008, but only gave one day's warning.

But as prices have been reduced since then in response to lower wholesale costs, it regularly takes up to a month for the change to come into effect.

This was the case for British Gas's reduction in gas costs in early 2009 and more recently from E.ON and Scottish & Southern.

Ofgem will begin consultation on the new rule this week. If blocked by enough suppliers, the regulator can refer the matter to the Competition Commission, while the Government can also use its powers under the new Energy Act 2010 to force action.

Mr Wright said: "Companies should be under no illusions: we will continue to keep the effectiveness of the energy market under review and will not hesitate to bring forward further measures to protect consumers if the evidence shows them to be necessary."

Audrey Gallacher, head of energy policy at Consumer Focus, said: "Ensuring energy customers get advance notice of price rises is something we have long called on Ofgem to do and it is a welcome move for consumers.

"If people's energy bills are going to go up, of course they should be told in advance, not up to two months later."

She added: "The next step is for Ofgem to tackle the confusing array of energy tariffs consumers have to battle with. It should also address problems with rollover contracts, where people can be unwittingly tied into long deals with expensive get-out clauses."