Energy regulator Ofgem has said that a new regime is to be introduced from today, aimed at preventing energy companies from overcharging their customers. In addition the regulator said that it was seeking explanations from two of the big six energy companies about their pricing.

Ofgem has said that energy companies must make their bills clearer by stating how much energy households have used, how much it costs, the annual price and must even tell customers if other tariffs are cheaper. The regulator conceded that such complex bills are likely to increase processing costs for energy companies, a cost which could be passed onto customers.

Energy firms will also be required to put a stop to the practice charging some customers more for paying with cash or cheques, rather than by direct debit.

Ofgem said that it was currently investigating two energy companies for overcharging its customers.

Sarah Harrison, Senior Partner of Sustainable Development at Ofgem, said, "The report is encouraging news for a lot of customers as unjustified price premiums have fallen significantly. However we do have concerns over some premiums and have made it clear to the two suppliers concerned that we will take action if the differentials cannot be justified.

"We want customers to have a much better picture of their energy consumption and how much they are spending. Clearer bills and annual statements will put all this information at their fingertips so they can compare energy deals more easily when they are thinking of switching."