A simples guide

The Removal of the Four Tariff Rule

The Competition and Market Authority (CMA), the competition watchdog of the UK government has recommended that the industry regulator Ofgem abolishes the four tariff rule. Who’s who and what does it all mean for you? 


The CMA work to promote competition for the benefit of consumers. They’re part of the UK government and have around 700 staff across the UK.


Ofgem is the Office of Gas and Electricity Markets. Like the CMA, they are a part of the UK government and it is their job to protect the interests of electricity and gas consumers.

The four tariff rule

Back in 2010 a ‘Retail Market Review’ of the energy industry was commissioned and at the beginning of 2014, Ofgem announced certain changes to tariffs with the intention of ‘restoring consumer confidence.’

One of the most important aspects of this was the creation of the so called ‘four tariff rule.’ The rule restricted suppliers to just four tariff options per customer for both electricity and gas. The regulator argued that:

  • Complex tariffs would be banned. Suppliers could only have one structure for tariffs with a unit rate and a standing charge. This they argued, would make tariffs easier to compare and therefore the logic followed, more people would switch and benefit.
  • Choosing a new deal would be easier now that only four core tariffs were available.
  • Only two discounts would be allowed, for dual fuel and for managing your account online. Again this would be much simpler they argued.

So, what’s the outcome?

If the four tariff rule was supposed to drive change it doesn’t seem to have worked, and the CMA agree in their findings released at the end of June. Now, rather than arguing that the four tariff rule helped simplicity and understanding, the CMA argues that it hinders competition.

Abolishing the rule, the CMA argues, will give customers access to more options and allow suppliers to be creative in putting together more competitive offerings.

removal of the four tariff rule

Will abolishing the four tariff rule work?

Maybe. Those supporting the CMA decision can argue with some justification that the four tariff rule simply wasn’t having the desired effect, therefore it’s better to try something else rather than just carrying on as we were.

Critics would suggest though, that before the four tariff rule was introduced, we had around 500 tariffs that bamboozled the consumer. The new CMA proposal may well give us more tariffs to choose from – but will we be able to find them?

Compare the Market works to encourage people to compare energy tariffs and give them the opportunity to save money by switching from fixed tariffs to dual fuel. In only the first four months of this year we helped our energy customers save over £34 million.

We’ll continue to work hard to get more and more people to compare energy prices. 93.3% of customers found our energy insurance experience easy or very easy*. Together we can help not only you to save money but also help drive the prices of energy down for everyone, befitting you all.

*For the period 1st March to 31st August 2018, 1,892 people responded to the question “Overall how easy was it for you to get a quote” for Energy, 1,766 responded with a score of easy or very easy (93.3%).