En­ergy giants face price cap de­spite fall­ing bills

The Daily Telegraph - Business - - Business - By Jil­lian Am­brose

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

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