May’s plan to cap energy bills ‘could break EU law’

THERESA May’s plans to introduce a price cap on energy bills could fall foul of European Union law, the Government was warned last night.

The Conservatives have indicated they are preparing to introduce curbs on energy charges with the proposals likely to be outlined in the party’s forthcoming manifesto.

It is thought the Government may decide to either order bills to be cut by £100 or introduce a relative price cap to reduce the gap between standard tariffs and the cheapest deals offered.

The major energy firms fear a price cap could be aimed solely at them since they dominate the market to a large degree and insiders have warned that any such move could result in the companies appealing to Brussels.

One senior energy executive said: ‘We are still in the European Union and EU law says you cannot be discriminatory in such matters by targeting particular companies rather than an entire sector.’

The energy market is dominated by the Big Six energy firms – British Gas, SSE, EDF, Npower, Eon and ScottishPower – which account for about 85 per cent of the market.

More than 40 smaller suppliers share the remaining 15 per cent of the market.

Five of the six major companies – with the exception being British Gas – have sharply increased prices in recent months and the average dual bill is now £1,200.

The firms blame the rises on an increase in wholesale energy prices coupled with the higher cost of ‘green taxes’, which subsidise renewable energy such as wind farms.