Energy announcement 'will stick to PM's promise'

The Government's energy bills announcement will be made tomorrow Photo: Rui Vieira/PA Archive

Downing Street sources are adamant that the Government's announcement tomorrow on energy bills will stick to the Prime Minister's promise to use the law to get consumers lower tariffs.

They insist that there will be an element of compulsion in the plans, whereby the "Big Six" will have to tell customers what the cheapest tariff would be for them and switch them to it, unless the customer declines the offer.

I understand the Government will reduce the number of tariffs that any one company offers to four, one of the original proposals put forward by the regulator Ofgem.

But consider this. If companies are only allowed to offer four tariffs, it is entirely possible that they will, for example, only offer one fixed-rate tariff.

By default then, all customers who were on a fixed-rate tariff would be on the same. By virtue of it being the only tariff of its type, it would be, by default, both the cheapest and the most expensive because it is the only option.

It may sound like silly semantics but it would, in theory, allow the Government to claim they were making sure customers were on the lowest tariff of the type they choose.

Prime Minister David Cameron promised to use the law to get consumers lower tariffs Credit: Stefan Rousseau/PA Wire

But until we see the details of the rest what the Government is planning to do in black and white tomorrow afternoon, it is impossible to be completely clear about the package.

What is however completely clear is what the Prime Minister originally promised in a heated Prime Minister's Questions. He said, "I can announce, which I am sure the Honourable Gentleman will welcome, that we will be legislating so that energy companies have to give the lowest tariff to their customers".

What is also clear is that Number 10 is extremely keen to be able to find a way where the plans that are being unveiled do not give the impression that it has somehow backed down.

Tomorrow, companies and consumers will be looking very carefully to see whether that's a promise that will be kept.

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