RACHEL RICKARD STRAUS: Ofgem's meddling put an end to green energy tariffs - and I hope it gets thoroughly told off for it 

School boy error: Ofgem tried to fix one problem and created another

School boy error: Ofgem tried to fix one problem and created another

Ever wondered where all the green energy tariffs went?

A couple of years ago most energy suppliers offered one, for those who wanted to take some control of where their energy came from. They cost a few extra quid, but for thousands of households that seemed a fair price to pay to know they were encouraging the use of renewable energy above fossil fuels.

Now there are only just a handful on the market, and none available from the big six suppliers.

It’s not that demand dwindled, or that the energy suppliers had anything against them – it was the work of Ofgem that led to their demise.

The energy regulator introduced a new rule last year to limit each supplier to just four tariffs per customer for both electricity and gas.

The strategy was well intended; Ofgem considered that households were being bamboozled by so many confusing and complex tariffs, which made it difficult to pinpoint the best deal.

Even Prime Minister David Cameron said at the time that the large number of billing rates were adding to customer confusion.

But while the move to four created simplicity, the side effects meant it would probably have been better if Ofgem had left well alone.

Along with green tariffs, specialist tariffs offering the elderly cheaper energy were also dumped.

Ofgem even tried to ban Ovo Energy from paying its customers interest on any outstanding balances because it didn’t technically comply with the rules.

Independent energy suppliers claimed the rule has also stifled competition because suppliers are unable to offer innovative tariffs to stand out from the crowd. You’ll notice you’ll never get a discount for paying your energy bill promptly now either.

Of course suppliers didn’t have to ditch the green tariffs, nor any of their social tariffs. But with a limit of just four permitted, they got rid of those that were least popular and at the time green tariffs were still quite niche.

Rumour has it that when it announces the findings of its investigation into the energy market tomorrow the Competition and Markets Authority will recommend this four-tariff policy is finally ditched.

I hope it is rethought, and Ofgem is forced to do some real thinking about distorting the market with such a blunt instrument and what it has cost.

A new way of regulating tariffs will be increasingly important as smart meters are rolled out creating a market for personalised tariffs and time-of-day tariffs that could help households cut their bills.

Ofgem should also be recognised for what it has done though.

Since they were phased out, it has emerged that many of the green tariffs offered by big suppliers were completely meaningless.

Suppliers have an obligation to use a certain proportion of energy from renewable sources. It turns out that several were just bundling up their obligations and calling them green tariffs, rather than increasing their proportion of renewable energy overall.

Simplication: Ofgem has strived to make energy bills clearer for people to read and understand

Simplication: Ofgem has strived to make energy bills clearer for people to read and understand

In April, Ofgem finally set out new rules to create transparency around green tariffs, so suppliers couldn’t just pretend that they were doing more than they were obliged to do anyway.

I hope that the CMA findings will herald a fresh start for green tariffs; energy suppliers will have the flexibility to offer them again and there is now the regulation to ensure that they do actually encourage alternative fuel sources.

In the meantime, there are a few companies that do offer green tariffs, which genuinely do invest in renewables.

Green Energy, Ovo Energy, Good Energy, Ecotricity are some of these.

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