Tories pledge to cap rising energy prices

Tories pledge to cap rising energy prices

Tories pledge to cap rising energy prices

Theresa May has vowed to introduce a cap on standard variable energy tariffs in the Conservative Party manifesto, in a bid to end the "injustice" of increasing energy costs.

Stephen Murray, energy expert at price comparison website MoneySuperMarket, says: "For customers who have the ability to switch - the majority outside the most vulnerable - an energy price cap would be a disaster... it will lead to numerous best deals disappearing, prices finding a higher level and a growing market of disengaged customers".

Former Labour leader, Ed Miliband, had promised to freeze energy prices for 20 months after the 2015 general election if they won power (which they didn't).

Under the proposed plan, the energy regulator Ofgem would set a limit for the standard variable tariffs that customers move to by default after their existing deals run out. Its plans for a cap on price hikes were lambasted at the time by the Conservatives who accused the then leader Ed Miliband of wanting to live in a "Marxist universe".

"We need to make the energy market more competitive, so the customer is king and big business fat cats can't take us for granted", he said.

She told Sky News: "With about two-thirds of consumers sitting on the expensive standard variable tariffs the Tories are talking about, there are big savings to be made by making a whole of market comparison". The energy industry has argued that a price cap will wipe out competition and force companies to increase the cost of their lowest tariffs. They raise the prospect of prices across the board tending to be closer to the Ofgem-set cap, thereby reducing the incentive for consumers to switch.

According to a Government-backed study, customers have been forced to pay £1.4bn a year in "excessive prices", but the CMA stopped short of imposing a cap for fear of stifling the competition.

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"Ed Miliband didn't suggest a cap on energy prices", she said.

The firm, the only one of the "Big Six" that did not hike prices, lost 261,000 customers to competitors in the first quarter of 2017, on top of the 400,000 customers British Gas lost previous year.

However, she said she could not promise that her planned cap would guarantee prices do not go up "year on year" but said it would prevent "sudden and unexpected and significant" jumps in the price of gas and electricity. "Too many people simply aren't getting a fair deal", said Theresa May in The Sun.

"As the Conservatives pointed out at the time, this will damage investment in energy when it is needed more than ever", he continued.

Iain Conn, the chief executive of British Gas owner Centrica, which saw its share price slide 1.58% on Tuesday after the policy was confirmed, suggested there might yet be some sops for the industry when the final detail was revealed.

The Confederation of British Industry, which represents the country's biggest companies, also voiced concern, saying a "major market intervention" could hit investor confidence.

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