May pledges £100 energy bill cut for 2 in 3 families

THERESA May will slash the energy bills of millions of families by about £100 in a drive to win over Labour voters, it was announced yesterday.

The Tory manifesto will include a pledge to cap gas and electricity prices for the two-thirds of households on standard tariffs.

Energy firms last night threatened to retaliate by offering worse customer service and removing cheaper deals for those who shop around.

Ministers are taking action after accusing electricity and gas companies of ‘milking’ loyal customers. Five of the Big Six firms have increased standard variable tariffs in recent months.

Under Tory plans to be unveiled in the manifesto next month, energy regulator Ofgem will set maximum prices that energy firms can charge customers.

Work and Pensions Secretary Damian Green yesterday confirmed the cap will be at the centre of the party’s offer to voters. ‘Theresa May has a particular personal vision about helping people and addressing problems,’ he told ITV’s Peston on Sunday.

‘There are groups in society that feel life has become unfair, that even if they are working hard and doing the best for their families, somehow they are getting a bad deal and that does involve changing things like the energy market.

‘I think people feel some of the big energy companies have taken advantage of them with the tariffs they’ve got.’

Mr Green insisted the proposal was not the same as Labour’s energy prize freeze promised at the 2015 general election.

He added: ‘ Ed Miliband proposed a freeze, so the govern- ment would set a level and then immediately after the energy price fell quite considerably because oil prices fell for various external reasons. ‘ The difference is that we would have Ofgem setting the limit, so it would be a cap. ‘It would be more flexible, it would be able to reflect market conditions so the market would still have an influence.

‘That would mean, in practical terms, if the oil price fell again, consumers would benefit in a way they wouldn’t have done under Ed Miliband’s proposal.’

But energy firms claimed that a price cap could risk billions of pounds in investment and lead to a removal of some of the best deals from the market.

Iain Conn, chief executive of Centrica which runs British Gas, said: ‘We do not believe price regulation is in consumers’ interests … Price regulation will result in reduced competition and choice, stifle innovation and potentially impact customer service.’

Lawrence Slade, of trade body Energy UK, said: ‘Only last year, the Government’s own competition regulator decided against introducing a wider price cap, instead opting for a cap for prepayment customers which came into force this month.

‘Intervening further … would be giving up on competition, and … will additionally create huge uncertainty around Government intentions, potentially putting at risk the billions in investment and jobs needed to renew our energy system.’

He added: ‘As in any competitive market, those who engage stand to benefit most. But the answer is not to distort the market as a whole and risk households who do shop around suddenly finding there are no more cheap deals for them.’

Business Secretary Greg Clark last week said the market worked best for customers with the time and inclination to hunt out cheap deals on the internet.

‘Those consumers who for one reason or another are not so active or fleet of foot are being milked,’ he added.

French energy firm EDF triggered outrage by increasing its electricity prices by 8.4 per cent last month. It will bring in a second rise of 9 per cent in June.

‘Consumers would benefit’