May revives energy price cap proposals

Prime Minister Theresa May has revived the idea of an energy price cap which she says will save 12 million householders an average of £100 a year.

The cap would apply to people on a standard variable tariff, who often face higher bills than those on fixed-term deals. However, some consumer groups warned it could mean higher prices for all customers.

Speaking in Manchester Mrs May said the move would help vulnerable customers. Full details of the plan, which will be implemented by energy regulator Ofgem, will be unveiled in a draft Parliamentary bill next week.

She said: “The energy market punishes loyalty with higher prices, and the most loyal customers are often those with lower incomes, the elderly, people with lower qualifications and people who rent their homes.”

But consumer groups said the government should instead encourage suppliers to proactively get their customers off expensive standard tariffs and set targets to encourage switching.

Martin Lewis, founder of Moneysavingexpert.com, said: “A price cap done wrong can do more harm than good.

“Some in the Tories have called for a ‘relative’ price cap – which means a firm’s most expensive price can only be a set percentage more than the cheapest. That’s self-defeating – it means they’ll just withdraw cheap deals.”