British energy minister Greg Clark is today set to announce the government’s plans for a price-cap on household gas and electricity prices.
Whitehall sources indicated that Clark’s expected statement will deliver a legislative basis for the pledge announced last year by prime minister Mrs May.
The new Domestic Gas and Electricity (Tariff Cap) Bill will put in place a requirement on the independent regulator, OFGEM, to cap energy tariffs until 2020.
It will mean an absolute cap can be set on poor value tariffs, protecting the 11 million households in Wales,Scotland and England who are currently on a standard variable or other default energy tariff and who are not protected by existing price caps.
Last night, Labour MP Rachel Reeves, Chairman of the Business, Energy and Industrial Strategy Select Committee, said: “An energy price cap is urgently needed to help fix the broken energy market and protect consumers.
“I’m pleased the Government appears to have listened and agreed to the BEIS Committee’s recommendations to put an end to the overcharging of millions of customers stuck on default and standard variable tariffs (SVTs).
“Our report was unanimously agreed by the Committee, the Bill has cross-party support, and both Conservative and Labour election manifestos included a commitment to an energy price cap.
“British energy consumers have been overcharged for too long and the Government now needs to quickly ensure this legislation is passed in time to protect customers next winter”.
Earlier this month, her published its report on the Government’s energy price cap draft Bill.
The Committee found the current energy market is broken and penalises customer loyalty. The Committee also found that the Big Six had brought the introduction of a price cap upon themselves by their raising of prices in 2017 and by failing to take effective action against the overcharging for years of their customers on default and standard variable tariffs (SVTs).
From the energy providers, Lawrence Slade, chief executive of Energy UK last night commented: “It’s vital that this new cap doesn’t halt the growth of competition which is helping customers to find a better deal and save on their energy bills.
“It’s also important that the cap accurately reflects suppliers’ costs, most of which are out of their direct control. OFGEM’s decision to raise the level of the pre-payment cap last week shows how these costs can increase.
“Suppliers remain committed to further improving engagement and choice for all their customers and doing more to support those in vulnerable circumstances.
“With a record one in six customers switching last year and now with more than 60 suppliers to choose from, the energy market is changing rapidly and has never offered so much choice.”
26 Feb 2018