Theresa May has announced the government will publish a draft bill next week to put a price cap on energy bills.
Speaking at the Conservative Party Conference today, the Prime Minister said the government will take action to fix the broken energy market.
“Because the energy market punishes loyalty with higher prices. And the most loyal customers are often those with lower incomes: the elderly, people with lower qualifications and people who rent their homes. Those who for whatever reason, are unable to find the time to shop around.
“That’s why next week, this government will publish a Draft Bill to put a price cap on energy bills. Meeting our manifesto promise. And bringing an end to rip-off energy prices once and for all.”
During the election campaign, May promised to bring in a price cap for those on SVTs, but the energy regulator, Ofgem, then published a set of watered down proposals only safeguarding two million households.
Just last week, a cross-party letter was submitted to May and Greg Clark where 192 MPs urged the government to introduce an energy price cap to protect the 17 million families on pricey standard variable tariffs (SVTs).
Don’t wait, switch and save now
Stephen Murray, energy expert at MoneySuperMarket, said consumers should look to switch now rather than wait to save £100 as part of the energy price cap. He said: “Our message to consumers is clear – there’s no need to wait for any draft legislation, as you can quickly and easily save £250 by switching to a more competitive fixed-rate deal today.”
Richard Neudegg, head of regulation at uSwitch.com, said a widespread price cap will not improve the retail energy market as some think it will.
“All the evidence from previous interventions like this shows that it does not lead to long-term improvements for consumers. The only way to keep energy companies in check is to maintain the pressure of competition on them to keep prices down for all their customers.
“The government should instead push suppliers to proactively get their customers off expensive standard tariffs and set targets to encourage more customers to make a choice about their energy deal. A price cap condemns energy customers to more of the same – it lets suppliers off the hook by encouraging consumers to stay put instead of voting with their feet.”
‘Customer would be king once again’
John Penrose MP, who submitted the cross-party letter to the Tory leader, said: “The PM is absolutely right to protect households from rip-off energy bills with an energy price cap if Ofgem are too spineless to act.
“She’ll have plenty of support, with over 200 cross-party MPs and most of the ‘challenger’ energy firms supporting a relative price cap.
“It’s the best way to protect families from being ripped off, it would keep plenty of customer choice, competition would be red hot, and the customer would be king once again.”