Energy price cap plans go before parliament

  • Energy price cap plans go before parliament

Energy price cap plans go before parliament

The government is to present legislation before parliament to limit unit prices charged for electricity and gas, in time for next winter, for customers not yet protected who end up with the highest tariffs.

SVTs - often the most expensive type of default charge - are paid by 11 million United Kingdom households, largely because they have failed to switch tariff or supplier.

Committee chairperson Rachel Reeves said: "The Big Six energy companies might whine and wail about the introduction of a price cap".

Standard variable tariffs are typically more expensive than fixed-term contracts, punishing those who do not switch.

The move is created to guarantee protection for the 11 million households that are on the highest energy tariffs as well as the five million vulnerable households already protected by Ofgem's safeguard cap.

The tariffs, which could save people up to £100 a year, would be limited until 2020, with the option to extend the cap annually until 2023.

The level of the energy price cap will be reviewed every six months and extra safeguards will be included for customers on green default tariffs, the government has announced as it tables legislation to intervene in the supply market. "This is another step we are taking to help people make ends meet as we build a country that woks for everyone".

Bill compels regulator Ofgem to implement the cap once the law has given it new powers. The Competition and Markets Association has said customers overpay on their energy bills by 1.4 billion pounds ($2 billion) a year.

Plans for a universal price cap were announced in the Conservative manifesto previous year, but after the election Mrs May passed responsibility to Ofgem, which faced criticism for only coming up with proposals to protect the most vulnerable. May has followed on with these plans after she promised to crack down on "rip-off" bills in her keynote speech at the Conservative party conference.

She added: 'Millions of loyal energy customers have been ripped off by their suppliers for too long.

Among its recommendations, the select committee said suppliers should only be allowed to appeal through a judicial review and not to the Competition and Markets Authority as Ofgem and some suppliers said it could unnecessarily delay the implementation of the cap.

Responding to the price cap legislation announcement, Energy UK chief executive Lawrence Slade said it raised a "serious risk" of "unintended consequences".

"It's also important that the cap accurately reflects suppliers' costs, most of which are out of their direct control".