19 November 2012 Last updated at 23:05 ET

Energy plans by government target cut in tariffs

The government wants companies to cut the number of tariffs they offer

The government will detail later how it intends to force energy firms to offer customers the lowest suitable tariff.

Energy Secretary Ed Davey will set out plans for fulfilling the PM's pledge last month to bring in legislation.

He will say that companies will have to reduce the number of tariffs to four each for gas and electricity, in a bid to cut the confusing array on offer.

David Cameron's pledge appeared to be a surprise to the energy department at the time.

Automatic switch

In an appearance before Parliament's energy select committee, Mr Davey is expected to say that firms will offer just four core tariffs for both gas and electricity - a fixed price for a fixed term and a standard variable rate, with two others based on different criteria such as payment method or whether renewable energy is a factor.

Under the plans, companies would be forced to switch customers automatically to the lowest suitable tariff unless they objected.

BBC deputy political editor James Landale says Downing Street insists this means Mr Cameron will have fulfilled his promise.

"But the real test will be whether people actually see smaller bills at a time when energy prices are rising," our correspondent adds.

Energy regulator Ofgem had been looking into pricing for some time, and published its proposals just days after Mr Cameron's pledge, but it did not go as far as the government intends to.

Ofgem's proposals included banning complex multi-tier tariffs, new personalised information to help consumers find their best deal, and ensuring customers default to the cheapest option at the end of a fixed-term contract.

Currently most people buy their gas and electricity from just six big suppliers, although there are smaller suppliers, amid a vast selection of tariffs.

Last month business groups warned that forcing companies to give customers the cheapest tariffs could damage competition in the market.

Renewable targets

The structure of the charges can vary depending on payment method (by direct debit, pre-payment meter, or credit transfer such as cheque), on whether it is an internet-only tariff, which part of the country the customer lives in, if the deal involves a fixed price, when the deal was launched, how long it lasts, and so on.

Meanwhile, MPs have urged Mr Cameron to end uncertainty for investors and set clear targets for clean energy in 2030.

The Environmental Audit Committee says firms will only invest enough in new renewables if the 2030 target is fixed in the forthcoming Energy Bill.

But Chancellor George Osborne rejects the target - and BBC News understands he is now being backed by the prime minister.

The coalition is seeking a compromise to allow the Liberal Democrats to retain pride in their flagship Bill.

Source : bbc[dot]co[dot]uk