Reforms to energy tariffs should help create a simpler and clearer market and help rebuild consumer trust, industry regulator Ofgem has said.
Confusing and complex tariffs will soon be simplified and suppliers will be limited to four core tariffs per customer for both gas and electricity. Discounts to energy tariffs will also be made easier to understand.
From April, suppliers will have to inform consumers which of their tariffs is cheapest for them.
A Tariff Comparison Rate will also be introduced, which will allow customers to easily compare tariff rates, and bills and quotes will include a “personal projection”, which will forecast what a customer will pay based on their usage or a best estimate.
How customers are notified of price increases will also change, with rises spelled out in pounds and pence.
Ofgem chief executive Andrew Wright told the BBC he hopes the changes will ultimately drive down prices for consumers.
“Profits are not an entitlement,” he said. “They should be earned by companies competing keenly to offer consumers the lowest prices and the best service. Now it is up to suppliers to build on our reforms to restore consumer confidence in the energy market.
“There are good signs that they are taking up this challenge.”
Mike O’Connor, chief executive of consumer representation organisation Consumer Futures, welcomed the announcement. He said: “Consumers need a market they can trust and this reform package brings that closer.
“We have allowed what should be a market for an essentially simple service to become a byword for complexity and confusion and sometimes very dubious practices.”
Mr O’Connor said it would be naive to assume the reforms would solve problems in the energy market, and proposed a review to assess whether the structure of the market fails consumers. He also called for further programmes of energy efficiency to cut bills and a simplification of the choices open to consumers.