UK to publish draft energy price cap laws, seeking to fix ‘broken’ market

LONDON: Britain will publish a draft law designed to cap consumer gas and electricity prices for millions of households, taking action to try and fix a market it says punishes loyal customers.

Prime Minister Theresa May first proposed a price cap on the energy sector earlier this year, the biggest market intervention since its privatisation almost 30 years ago.

Her announcement last week that the plan would go ahead initially wiped more than 900 million pounds (US$1.19 billion) off the value of the two British listed companies Centrica and SSE alone.

Energy bills have doubled in Britain over the past decade to an average of about 1,200 pounds (US$1,500) a year, putting the biggest providers in the sights of politicians.

“I have been clear that our broken energy market has to change – it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much,” May said in an emailed statement on Thursday.

The government will publish the draft laws later in the day, inviting scrutiny from parliament before it begins the legislative process. No details about the level of the cap were provided in advance.

Under the bill, the regulator Ofgem would bring in a price cap on standard variable tariffs (SVTs), which are basic rates that energy suppliers charge if a customer does not opt for a specific plan.

The business department said the cap would come in as soon as practicable after the legislation has passed.

It will be a temporary measure, in place until the end of 2020 and Ofgem will then decide if the cap needs to remain, depending on how the market is working.