Power firms to offer lowest tariff — by law

Energy companies are to be forced by law to offer customers the lowest tariff for their circumstances, David Cameron announced today.

The move is intended to tackle concerns that many householders, at a time of rising fuel costs, are already paying more than they need to because of the bewildering number of deals available.

The Prime Minister promised legislation in the autumn to ensure millions of customers do not have to pay their suppliers more than they should.

He intervened after energy giants announced new price increase as winter approaches. Announcing the new law at Prime Minister’s Questions, Mr Cameron took a swipe at Labour leader Ed Miliband who was previously energy secretary.

“We will be legislating so that energy companies have to give the lowest tariff to their customers, something that Labour didn’t do in 13 years, even though the leader of the Labour party could have done because he had the job,” he said.

Ministers have previously encouraged consumers to shop around and make sure they are on the best available deals.

They have also announced moves to require energy companies to inform their customers if they could be on cheaper tariffs.

But the forthcoming Energy Bill will go further by introducing a requirement for companies to give people the best tariff for their particular circumstances.

Deputy Prime Minister Nick Clegg announced in April an agreement with the big six energy companies for them to give their customers the lowest tariff on request.

The Government will now legislate on this issue but it was not clear whether consumers would automatically get the lowest tariff or still have to ask for it.

Mr Cameron, Mr Clegg and George Osborne were today holding a meeting on the Government’s energy policy today.

Scottish Power became the latest energy company to announce price hikes. Its 2.3 million households will see price rises of an average of seven per cent.

The increase, which takes effect from December 3, means a typical monthly direct debit customer will see their average annual dual fuel bill rise to £1,271.