Fri, Oct 13, 2017 - Page 10 News List

UK to draft law that caps household energy prices

Reuters, LONDON

Britain yesterday was to publish a draft law designed to cap consumer gas and electricity prices for millions of households, taking action to try and fix a market that it says punishes loyal customers.

British Prime Minister Theresa May first proposed a price cap on the energy sector earlier this year, the biggest market intervention since its privatization almost 30 years ago.

Her announcement last week that the plan would go ahead initially wiped more than £900 million (US$1.19 billion) off the value of the two British listed companies, Centrica and SSE alone.

Energy bills have doubled in Britain over the past decade to an average of about £1,200 a year, putting the biggest providers in the sights of politicians.

“I have been clear that our broken energy market has to change — it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much,” May said in an e-mailed statement yesterday.

The government was to publish the draft laws later yesterday, inviting scrutiny from parliament before it begins the legislative process. No details about the level of the cap were provided in advance.

Under the bill, the UK Office of Gas and Electricity Markets (OFGEM) would bring in a price cap on standard variable tariffs (SVTs), which are basic rates that energy suppliers charge if a customer does not opt for a plan.

The cap would come in as soon as practicable after the legislation has passed, the business department said, adding that the cap would be a temporary measure, in place until the end of 2020, and that OFGEM would then decide if it needs to remain, depending on how the market is working.

Britain’s energy market is dominated by the so-called big six providers — Centrica’s British Gas, SSE, Iberdrola’s Scottish Power, Innogy’s npower, E.ON and EDF Energy — which account for about 85 percent of the retail electricity market.

More than 18 million customer accounts in Britain are currently on an SVT or other default tariffs, many of which offer poor value to customers because they are priced higher than the fixed-rate deals available to consumers who actively seek them out.

The government said it wanted to go further than plans announced on Wednesday by OFGEM to extend an existing price cap that applies only to vulnerable consumers.

Whatever was contained in the upcoming legislation, OFGEM said, the government’s price cap would not come into effect for the upcoming winter.

This story has been viewed 918 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top