PM's energy pledge 'could still leave some households paying more'

Millions of households could cut their fuel bills under sweeping reforms — but others could end up paying more, experts said today.

Regulator Ofgem announced the biggest shake-up in the domestic energy market since competition was introduced in the Nineties.

The changes to make the system “simpler, clearer and fairer” include:

The reforms fall short of David Cameron’s pledge to legislate so energy companies have to give customers the lowest tariff.

The Prime Minister is facing accusations from business chiefs and Labour of causing confusion in the energy market with the promise. He would face fresh embarrassment if a significant number of people see their bill rise under his or Ofgem’s proposals.

Ofgem said the “majority” of households were expected to benefit from its proposals.

But Joe Malinowski of price comparison website TheEnergyShop.com said: “The logical conclusion of everyone coming on to one standard tariff is that there will be losers as well as winners — some people who will see bills go up.”

He said the biggest losers were likely to be the estimated 25 per cent of customers who shopped around to find cheaper discounted tariffs and who currently enjoy between £80 and £190 annual savings.

They could see their bills go up by just over £100 while the majority on standard tariffs may get savings averaging around £34.

Mr Cameron, at an EU summit in Brussels today, stuck by his stance on cutting fuel bills despite the confusion and claims that No 10 is backtracking.

The Ofgem reforms, out for consultation, are due to come into effect next summer, while the Government is publishing its energy bill in the autumn.

Ian Marlee, of Ofgem, said: “The clear point here is that what we want to do is get an appropriate balance between allowing innovation in the market but making sure there isn’t a complicated array of tariffs out there.”