Energy price cap announced to stop '˜rip off' tariffs from gas and electricity companies
Energy prices could be capped for 11 million households across Britain as the Government takes power companies to task over “rip off” tariffs.
The Government is set to introduced legislation to Parliament today which Prime Minister Theresa May said would “force energy companies to change their ways”.
The Domestic Gas and Electricity (Tariff Cap) Bill, which the Government hopes will become law before next winter, would allow regulator Ofgem to put a cap on energy tariffs until 2020, with the option to extend it annually until 2023.
Standard Variable Tariffs
A 2016 report found consumers were paying £1.4 billion a year over the odds via energy companies’ standard variable tariffs (SVTs).
Announcing the bill, Mrs May said: “It’s often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways.”
The idea of energy price freezes was first floated by then-Labour leader Ed Miliband in 2013 amid concerns over price hikes, and was criticised by Conservatives at the time.
Plans for a universal price cap were then announced in the Conservative manifesto last year, but after the election Theresa May passed responsibility to Ofgem, which faced criticism for only coming up with proposals to protect the most vulnerable.
Frustrated by the lack of progress from the regulator, the Prime Minister announced legislation to rein in “rip-off” bills in her speech to the Tory conference in October.
A cap on the amount suppliers can charge per unit of energy was introduced in April 2017 for four million consumers with domestic prepayment meters in their homes.
On 2 February, the cap was extended to a further one million households receiving the Government’s Warm Homes discount, which is targeted at vulnerable consumers such as pensioners.
Gillian Guy, chief executive of Citizens Advice, said the Bill was “a significant step towards an energy market that works for everyone”.
She added: “Millions of loyal energy customers have been ripped off by their suppliers for too long. “It’s essential that protections from overcharging remain in place for vulnerable energy customers after the cap is lifted.
“We look forward to working with the Government to ensure that consumers in vulnerable situations are protected in the long term.”
But Lawrence Slade, chief executive of Energy UK, which represents power companies, said: “It’s vital the cap doesn’t halt the growth of competition which is helping customers to find a better deal and save on their energy bills.
“It’s also important that the cap accurately reflects suppliers’ costs, most of which are out of their direct control.”
This article originally appeared at our sister site, iNews