British PM May vows energy price cap if re-elected

Posted May 10, 2017

According to data released by the Competition and Markets Authority (CMA) past year, 70% of customers of Britain's "Big Six" energy providers - British Gas owner Centrica, SSE, E.ON, EDF, Scottish Power and nPower - have failed to switch from the highest standard variable tariffs.

Writing in The Sun newspaper, the Prime Minister confirms plans unveiled last month to protect gas and electricity customers on standard variable tariffs from "sudden and unjustified" increases.

British Prime Minister Theresa May pledged on Tuesday to cap household energy prices if she is re-elected on June 8, sending stocks tumbling with the biggest market intervention since the sector was privatised nearly 30 years ago.

In 2015 Labour made capping utility bills a central policy in its manifesto which David Cameron cited as proof the leader wanted to live in a "Marxist universe".

But it is nearly identical to a Labour policy from 2015 which was - at the time - slammed by the Tories as a quasi-Marxist state intervention.

"When you know that some of the most vulnerable people in society are being charged collectively £1.4bn more than the authorities say is justified you have a duty to act on that - and we will".

Justifying the move, the Conservatives pointed to a report last year by the Competition and Markets Authority (CMA) which found 70% of domestic customers of the "Big Six" energy companies were on SVTs to a cost of about £1.4 billion a year.

She answered: "I don't think any government can ever promise that no bill is going to go up year on year".

Theresa May has decided that an energy cap fits her political goal and has confirmed she will wear it into this election campaign.

Tories say the price limit could save 17 million families £100 a year, but energy bosses warned the Tory price cap could undermine competition.

"Is that right? Asking for a friend".

"The regulator Ofgem has tried intervening in the past, in the form of fewer tariff offerings by each company and the ban of different price offerings by an energy supplier in different regions".

Shares in Centrica have fallen 15% since the start of this year and some are speculating that it may cut its dividend to shareholders to cope with an estimated £200 million hit to profits from the cap.

Energy UK criticised the plan, with the organisation's chief executive Lawrence Slade saying the plan would actually prevent people saving money by simply switching plans. "Further intervention risks undermining so numerous positive changes we are seeing in the market which are delivering benefits for consumers", he said.

"Under our cap, prices will be able to come down".

CBI deputy director general, Josh Hardie, said:"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".