1 January 2014
Last updated at 19:07 ET
Households who have never switched energy suppliers may save more than £200 a year on their bills as reforms to the market come into effect.
Regulator Ofgem claims its banning of confusing and complex tariffs will create a simpler and clearer market.
Other changes include limiting suppliers to just four tariffs per customer for both electricity and gas and simplifying how prices are charged.
The body representing suppliers hopes the changes can rebuild consumer trust.
The moves are the result of a Retail Market Review which began in 2010.
‘Restore consumer confidence’
Further reforms will be introduced by April, including forcing suppliers to tell consumers which of their tariffs are the cheapest.
Ofgem chief executive Andrew Wright hopes the changes will ultimately drive down prices.
He said: “Profits are not an entitlement, they should be earned by companies competing keenly to offer consumers the lowest prices and the best service.
“Now it is up to suppliers to build on our reforms to restore consumer confidence in the energy market.
“There are good signs that they are taking up this challenge.”
Ofgem will produce an annual report to consumers on the health of competition in the market.
It has said it “will not hesitate to take further action” if it sees “evidence of further barriers to competition”.
Energy UK, which represents more than 80 energy providers and suppliers, said the reforms were essential to rebuilding trust with consumers.
Chief executive Angela Knight said: “If you look at the market now, the deals are fewer in number and much easier to compare.
“Customers will see improvements to the information they get as a result of energy companies bringing in the changes set out in the Retail Market Review.
“This should help people get the best deal.”
The latest reforms follow the introduction in October of new rules for fixed-term tariffs.
Suppliers are no longer allowed to increase prices during the course of a fixed term and must not automatically roll customers on to another fixed-term offer when their current one ends.
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Bill changes to "simplify" energy
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