Published: Wed, May 10, 2017
World Media | By Joan Schultz

May vows to cap energy bill increases if Tories win election

May vows to cap energy bill increases if Tories win election

The policy has been compared to the temporary energy price freeze advocated by Labour leader Ed Miliband before the 2015 General Election.

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.

The MPs are not breaking cover with direct criticism during the election campaign, but some are openly pushing for a more "relative" cap - which would link standard tariffs to the cheapest deals by capping the differential between the highest and lowest price an energy company can charge.

The new plan was first announced last month and many industry figures do not agree with it as they believe it could lead to higher prices.

May 9 Britain's energy market is inefficient and gives the biggest players too much power to overcharge customers, Energy Secretary Greg Clark said on Tuesday as he set out plans to cap tariffs.

Yes. In 2013 then Labour leader Ed Miliband said his party would freeze gas and electricity bills for every home and business in the United Kingdom for 20 months if it won the 2015 election.

The move would save 17 million customers £100 each year, according to the Tories. 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".

"Under our cap, prices will be able to come down".

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Experts at energy price comparison websites have voiced concerns that a price cap will be a "disaster" as it will damage competition.

The competition watchdog also warned a price cap could reduce customers' incentives to switch providers.

"That is despite the fact a Government-backed report last year found households are already paying £1.4 billion a year more than they need to". "Unlike the Tories' half-baked cap which only deals with some people, Labour policies will help people on every tariff", a spokesman said.

She answered: "I don't think any government can ever promise that no bill is going to go up year on year". That would imply that if wholesale prices continue creeping up, as they have in Ofgem's cost supplier index, bills will go up despite the cap.

For Centrica and SSE, the two most exposed to Britain, a price cap could limit their ability to increase dividends.

He added: "The Competition and Markets Authority's thorough two-year investigation identified low levels of consumers switching energy providers as a challenge, and put forward a range of recommendations to address this".

"A major market intervention, such as a price cap, could lead to unintended consequences, for example dampening consumers' desire to find the best deal on the market and hitting investor confidence".

Shares in Centrica have fallen 15% since the start of this year and some are speculating that it may cut its dividend to shareholders to cope with an estimated £200 million hit to profits from the cap.

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