npower cutting down to just four energy tariffs

Energy giant npower has made moves to comply with Ofgem’s market reforms, ahead of the December deadline.

npower is rolling out a new look energy bill and has pledged to cut the number of tariffs it offers from seven to four by October this year.

The energy giant says it wants to ‘cut out the clutter’ for customers in a bid to make bills and tariffs clearer and easier to understand.

But the changes also give the firm a head start in complying with some of Ofgem’s key energy tariff reforms ahead of the December 2013 deadline.

The new bill

The new bill has been produced with input from over 400 npower customers.

The research found that generally customers fall into two groups; the ‘skimmers’ who just look for what they have to pay, and the ‘checkers’ who require more detail on how much gas and electricity they’ve used.

npower says its new bill caters to both these groups, prioritising what they want to know and making clearer the things they need to know.

The new look bill puts the most important information at the top of the front page for the ‘skimmers’. This includes a breakdown of how much energy has been used, how much this cost and how this compares with the same time last year.

For the ‘checkers’ there is a facts section. This provides more detailed information including projections of what energy will cost on the current tariff in the next 12 months, energy saving advice and examples of how much energy certain appliances use.

Streamlined tariffs

As well as simpler, de-cluttered bills, npower customers are also in-line for streamlined tariffs.

npower has cut down its seven tariffs to five and by October there will only be four to choose from.

The four tariffs npower will end up offering include one-, two- and three-year fixed rates, as well as a standard variable deal.  

In addition to the tariff re-jig, npower is introducing a daily direct debit discount to replace the annual one.

The daily discount will be worth the same as the annual discount - £40 for electricity and £50 for gas - but you won’t be locked into the deal for 12 months to get it. This change will free customers to move onto a better deal without losing out.

npower will also increase the standing charge for single-rate electricity from £36 to £40, but this will be offset by a reduction in the unit rate.

And in the autumn, to reduce complexity, the firm will remove the dual fuel discount of £10 for standard tariff customers, but offset this with a £10 reduction in the standing charge of annual gas.

Ofgem’s shake-up

The changes from npower represent a move to comply with the recent market reforms from the energy regulator, Ofgem .

In the "most radical shake-up of the retail energy market in more than a decade", Ofgem has ordered energy companies to make the market simpler, clearer and fairer for the likes of you and me.

In its Retail Market Review the regulator set out aims for energy companies to help achieve its three goals:

Simpler

• Limit the number of tariffs to four per fuel type
• Get rid of multi-tier and expensive old tariffs no longer available
• Simplify charges by showing the standing charge plus a single unit price

Clearer

• All information sent to customers must be simplified, personalised and easier to understand
• Create and use a Tariff Comparison Rate to compare tariffs ‘like for like’
• Automatically put customers onto the cheapest tariff

Fairer

• Suppliers will be subject to enforceable standards of conduct that enables Ofgem to take action when customers are treated unfairly
• Better protection for those on fixed term contracts like banning price increases

The Ofgem Retail Market Review reforms have numerous deadlines.

From the end of August the enforceable standards of conduct, ensuring suppliers treat customers fairly, will come into force. But energy companies will have until December 2013 to comply with the key tariff reforms.

npower said it had decided to go ahead with its reforms so customers received the benefits sooner rather than later. But there are still things missing like the Tariff Comparison Rate.

Elsewhere SSE last week launched its new look bill that complies with most of Ofgem’s tariff reforms.

The cheapest energy deals

Energy firms are slowly getting into line and implementing the reforms that are designed to make the market simpler, clearer and fairer.

If you think you are getting a poor deal on your gas and electricity, you should switch. Here are the cheapest deals available right now.

* based on a typical dual fuel tariff costing £1,420 (SourceOfgem). All costs are for a yearly average usage dual fuel household paying by monthly direct debit. Average usage defined by Ofgem as 16,500 kWh p.a. of gas and 3,300 kWh p.a. of electricity.

*Based on typical gas and electricity bill, for someone who has never switched, costing £1,420

All calculations are for an average usage dual fuel household paying by monthly direct debit. Average usage as defined by OFGEM as 16,500 kWh pa of gas and 3,300 kWh pa of electricity

More on energy:

Energy tariffs to avoid!

The UK's worst energy provider

Should you avoid a fixed energy tariff?

Energy firms to be forced to publish wholesale prices

Energy bills could overtake mortgage repayments by 2025

E.ON to pay customers £2.5million after energy efficiency errors

Scottish Power launches the longest ever fixed-price energy tariff