Tories pledge to cap rising energy prices
- Author: Megan Austin May 10, 2017,
May 10, 2017, 3:21
CAB Director of Policy and Advocacy James Plunkett commented in a blog: "From the sound of briefings, the plan could be a full cap on the Standard Variable Tariff, the energy deal that two thirds of Britain's households are on".
Labour promised that is energy policy would go much further than protecting the 17 million people on standard variable tariffs.
The pro-independence Common Weal think tank said that a cap on energy prices, revealed by the Conservative party as its first major policy announcement today (9 May), was weakened by any cap being set by the energy regulator rather than the government, and didn't address the route problem of high prices - corporate control.
Labour leader Jeremy Corbyn pledged previous year that his party, which has yet to officially announce its energy policy, would provide energy "for the 60 million, not the big six".
Mrs May denied she was resurrecting an Labour policy derided as "Marxist" by David Cameron when it was put forward by Ed Miliband in 2015.
Stephen Murray, energy expert at price comparison website MoneySuperMarket, says: "For customers who have the ability to switch - the majority outside the most vulnerable - an energy price cap would be a disaster... it will lead to numerous best deals disappearing, prices finding a higher level and a growing market of disengaged customers".
For Centrica and SSE, the two most exposed to Britain, a price cap could limit their ability to increase dividends. "Is that right? Asking for a friend", he taunted the business secretary, Greg Clark, on Twitter. "A cap suggests a maximum amount that can be charged, not a promise that bills won't go up year on year".
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But Stephen Fitzpatrick, the chief executive of OVO Energy, described the policy as a "bold and ambitious move" - and argued that a cap on standard variable tariffs would not harm consumers or competition.
British Gas owner Centrica has warned that price regulation would lead to higher bills for consumers and reduce competition in the sector, claiming evidence from other countries suggests it would lead to potentially higher average prices. May also refused to confirm at a stump speech on Tuesday whether bills would definitely go down, and would only say that Ofgem would set the cap.
"We have to remember we haven't actually seen the policy yet, as someone senior in government reminded me not so long ago, so we have to keep a cool head", he said.
Elderly people, poor and disabled people are among those less likely to switch providers and therefore find themselves on overpriced rates as a result, which in turns boosts the providers' coffers.
"Further intervention risks undermining so numerous positive changes we are seeing in the market which are delivering benefits for consumers".
The business group CBI said a cap could hit investor confidence.
Even consumer groups are anxious that consumers will become less bothered trying to find a good deal if they think the government is doing it for them.