Energy News

Ofgem axes 28 day rule

Wednesday 01 August, 2008

New rules that could tie energy customers into year-long contracts similar to those in the broadband and mobile phone markets come into force today.

The new rules - which are likely to see customers forced into long contracts - have been introduced in an effort to promote the installation of energy efficient equipment such as A-grade boilers and loft insulation, which providers have been reluctant to install in the past, because customers could simply switch to a new provider 28 days later.

However, concerns have been voiced by consumer groups including Which? that customers could end up missing out on better rates as energy prices continue to fall.

Alistair Buchanan, Ofgem Chief Executive, said: “We have fixed in place protection to ensure that vulnerable customers are well served by the market while clearing the decks to allow innovation. We look now to the companies to respond,” adding that the new rules were “to the potential benefit of customers, industry and the environment”.

The scrapping of the 28 day rule will only affect existing customers if they choose to switch provider.

Chris Eagle, EnergyChoices.co.uk commercial manager, said: “While this change will incentivise suppliers to make homes more energy efficient, and to offer a greater choice of tariffs, these will no doubt have a host of conditions attached, such as exit fees for customers wanting to switch before their contract has expired.

“And just like in the broadband and mobile phone markets, the best deals will invariably go to new customers, leaving those loyal to the company on more paying far more.

“Customers looking to switch in the near future need to make sure they know just what kind of contract they’re committing to before signing up,” he added.

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