No bill 'guarantee' in energy plans

Energy Secretary Ed Davey has admitted he could not guarantee that plans to put people on the cheapest energy tariff would mean all households would see bills reduced.

The Government has announced proposals to require energy firms to provide just four tariffs for each fuel and to place all customers on the cheapest price available for their chosen tariff.

But concerns were immediately raised about the plans, which were first raised in a surprise announcement by Prime Minister David Cameron in the Commons last month that appeared to take the Department for Energy by surprise and plunged energy policy into confusion.

Critics have warned that the proposals, which build on Ofgem's retail market review, could see an end to cheap deals, stop consumers switching suppliers, reduce competition and push up bills in the long run.

The Government move comes amid long-standing concerns that many households are paying hundreds of pounds a year more than is necessary for gas and electricity because of the confusing array of different tariffs.

The issue has become more acute in recent years because of rising wholesale prices that have been passed on to customers.

Of the "Big Six" energy firms, five have recently increased their prices or announced they will be raising them in the next month. German-owned E.ON, the only utility not to have lifted prices, is reportedly planning a double-digit increase next month.

Asked whether people could expect smaller bills as a result of the announcement, Mr Davey said: "It will depend.

"I think many people will end up paying less, because this will both make it easier for them to choose what is best for them and I think it will drive competition, and therefore reduce prices. I can't guarantee every single person will end up paying less but I think this is a really good deal for people across the country."

Mr Davey said Ofgem was already planning to change companies' licences next year to ensure that the tariff system is simplified.