Tories to end rising energy bills

Tories to end rising energy bills

Boris Johnson "Miliband says he will imitate the catastrophic policies of the emperor Diocletian, by imposing a price freeze on energy bills for the 20 months succeeding the election".

Mr Murray added: "A price cap, whether relative or actual, will lead to numerous best deals disappearing, prices finding a higher level and a growing market of disengaged customers".

Under the new plan, industry regulator Ofgem will set a maximum cap for standard variable tariffs, which are used by about two-thirds of households. A separate CMA probe found competition among prepayment meter suppliers is less developed than for those who pay their energy bills every month, meaning customers have fewer tariffs available to choose from and the existing tariffs tend to be more expensive.

The proposed Tory cap would be introduced on standard variable tariffs, which around 70% of households are on.

"With a cap it would be very hard for the "Big Six" to generate the kind of profits they have been able to".

Jonathan Stevenson said: "This recognition that the government has a role in the broken energy market is welcome, but a tiny cap won't fit the scale of the problem".

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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But an investigation by the competition watchdog in 2016 said households had overpaid 1.4 billion pounds a year in the previous three years due to uncompetitive standard tariffs.

A cap on standard variable bills carried "excessive risks of undermining the competitive process, likely resulting in worse outcomes for customers in the long run", the CMA concluded. They raise the prospect of prices across the board tending to be closer to the Ofgem-set cap, thereby reducing the incentive for consumers to switch. "Too many people simply aren't getting a fair deal", said Theresa May in The Sun.

Shadow Business Secretary Rebecca Long-Bailey added: "When the Tories say they'll "cap" bills, the question they need to answer is whether they can guarantee bills won't go up for people next year - that's the real test".

For Centrica and SSE, the two most exposed to Britain, a price cap could limit their ability to increase dividends.

"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".

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.

Which? said measures that significantly reduce the cost of bills overnight will be welcomed "but this can not result in an increase in bills overall, undermine improvements in service or bring much-needed innovation to a halt".

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