May unveils draft energy price cap plan
A CAP on “rip-off” energy tariffs was announced by the Government under draft legislation published yesterday.
Watchdogs Ofgem will bring in a cap on poor value standard variable or other default tariffs, which will initially come into effect until the end of 2020 but would be extendable until the end of 2023.
If made law, the Domestic Gas and Electricity (Tariffs Cap) Bill will help more than 18million customer accounts in England, Wales and Scotland and would require Ofgem to consult and impose the cap “as soon as practicable”.
The cap was proposed in Prime Minister Theresa May’s Tory party conference speech last week.
The Government said: “While we are in favour of free markets, we will always take action to fix them when they’re broken.”
The Competition and Markets Authority found that customers of the Big Six energy suppliers on standard variable and default tariffs are paying £1.4billion a year more than they need to.
The draft Bill follows Wednesday’s announcement by Ofgem that they are to extend the prepayment price cap to one million more vulnerable households this winter, saving them £120 a year, although it won’t take effect until February.
May said: “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.
“The publication of draft legislation is a vital step towards fixing that and in offering crucial peace of mind for ordinary working families all over the country.”
Business and Energy Secretary Greg Clark said: “While five million households will see their bills capped from this winter, I want to see every household protected from rip-off bills.”