Britain's PM May vows to put an end to "rip-off" energy bills

Posted May 10, 2017

Jeremy Corbyn vows to stay on as Labour leader regardless of election resultThe Tories were accused of stealing former Labour leader Ed Miliband's plans for an energy price freeze when the plan was first trailed last month.

May promised to "take action to end this injustice by introducing a cap on unfair energy price rises" in a recent article for the Sun newspaper.

"A growing number of emerging and challenger suppliers have significant price differentials across their tariff portfolio and a cap would simply push many cheaper tariffs out of the market, resulting in higher prices".

The proposed cap would apply to default tariffs - or so-called standard variable tariffs - which around 17 million households are on against prices rising by more than 150% over the last fifteen years.

"We are all concerned about the impact of energy bills on the cost of living, but the way Miliband has responded to that in the long term, and also in fact in the quite near term, will have a profound impact in driving up the cost of energy".

"With a cap it would be very hard for the "Big Six" to generate the kind of profits they have been able to". These more passive consumers remain on standard tariffs with one of the "Big Six" energy suppliers, including 80 per cent of Britain's elderly, disabled and low income households. However, it suggested companies should have information on customers who have stuck on standard variable tariff for more than three years, to encourage them to offer better deals.

Experts at energy price comparison websites have voiced concerns that a price cap will be a "disaster" as it will damage competition.

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Mr Clark said that the Competition and Markets Authority had found that the market was not sufficient competitive.

However, energy analysts said that people would see their bills go up by £50 a year because of increasing energy policy and network costs that are already locked in over the course of the next parliament.

"It is important that these measures bed in before looking to further interventions". But she has also warned that she would intervene in industries deemed to be dysfunctional.

Iain Conn, the chief executive of British Gas owner Centrica, which saw its share price slide 1.58% on Tuesday after the policy was confirmed, suggested there might yet be some sops for the industry when the final detail was revealed.

"A major market intervention, such as a price cap, could lead to unintended consequences, for example dampening consumers' desire to find the best deal on the market and hitting investor confidence".

The firm, the only one of the "Big Six" that did not hike prices, lost 261,000 customers to competitors in the first quarter of 2017, on top of the 400,000 customers British Gas lost previous year.

Centrica said on Monday that it "did not believe in any form of price regulation" and has put forward alternative solutions, while ScottishPower repeated calls on Tuesday for SVTs to instead be scrapped altogether. This is the experience of other countries.