Energy giants face price cap despite falling bills
THE Government’s plan to cap household energy prices is set to steamroll ahead even as fresh data show wholesale prices are on the rise and bills remain well below their 2014 peak.
Ministers are set to unveil controversial legislation to cap tariffs tomorrow, despite data showing that energy bills are lower than they were when the threat of a market intervention first emerged.
The cheapest standard dual-fuel energy deal on the market is just below £940 a year, according to the regulator’s most recent data, well below the £1,100 a year paid in late 2013 when the Labour Party vowed to cap rising prices.
Since then a flood of almost 50 new entrants to the market has boosted switching between suppliers to record levels, helping to drive prices lower.
The Government has brushed off concerns that its cap may stifle the market’s burgeoning competition by insisting on a market-wide intervention, even after the industry regulator and the Competition and Markets Authority stopped short of backing the move. Instead, industry sources have called for the Government to do more to protect vulnerable energy users, improve the energy efficiency of homes, or look to scrap the use of default tariffs altogether.
“The Government should be looking at the most cost-effective way to reduce energy bills.
“This includes innovative and effective technologies such as energy efficiency and demand response. But the proposals for price caps completely ignore the potential for reducing energy consumption,” said Catherine Mitchell, a professor in energy policy at the University of Exeter.
Energy expert Catherine Mitchell has questioned the price cap thinking