Prime minister repeats energy price cap promise
October 05, 2017
Prime minister Theresa May has repeated a previous promise to impose an energy price cap in order to tackle "rip-off" action by providers.
Addressing the Conservative Party conference in Manchester, Mrs May said the government will be publishing draft legislation next week to give energy regulator Ofgem the power to impose a cap. While this falls short of guaranteeing a statutory cap, it does mean that the regulator will be able to make a judgement on whether prices are too high and act accordingly.
The idea had first been mooted before the general election and was included in the Tory manifesto, although critics suggested it copied an idea previously proposed by former Labour leader Ed Miliband before the 2015 election that was scorned by the Conservatives.
Among the main beneficiaries of a cap will be those who remain loyal to their provider even when they put prices up, rather than those who actively shop around for better prices. This "punishes" those who stick with the same firm, she noted, particularly "people on low incomes, the elderly and people with low qualifications".
It may not, however, change the fact that better prices will still be available even if Ofgem is actively capping tariffs once it gets the powers to do so.
The commitment was welcomed by Citizens Advice. Its chief executive Gillian Guy said: "Loyal customers on sky-high standard variable tariffs are paying over the odds for their gas and electricity - including many of the poorest pensioners and families.
"In the last year energy prices have gone up more than three times the rate of inflation for customers of the largest firms - and it is much more difficult for those with the lowest incomes to pay the average extra £89 on their bills."
Imposing caps could curb the "runaway" rise in energy bills that those on standard tariffs have endured over the last few years, she argued.
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