July 26, 2017

Would Tory price cap lower energy bills?

10 May 2017, 03:28 | Clarence Schmidt

Energy prices could still go up under Theresa May's price cap plans, admits Business Secretary Greg Clark

Tory business secretary defends energy price cap plan

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.

May promised to "take action to end this injustice by introducing a cap on unfair energy price rises" in a recent article for the Sun newspaper.

"Michael Fallon, the current defence secretary, who was energy minister then: he called it unsafe, he said it would kill investment, hurt consumers", Davey told the BBC's Radio 4. "We will legislate and this will be part of our manifesto". And she dismissed suggestions that it was a repeat of an energy price freeze dismissed as "Marxist" by David Cameron when it was proposed by Ed Miliband in 2015.

The Liberal Democrats' Ed Davey said: "It is never a good idea to copy the economic strategy of Ed Miliband".

Centrica Chief Executive Iain Conn said last month that May's plan to cap energy prices suggests some in her government do not believe in free markets at a time when it is pinning its post-Brexit hopes on free trade.

Energy prices could still rise every year under the proposed Conservative cap, the prime minister has admitted. "Under our cap the prices will be able to go down".

GETTYHomes can save £300 with the best energy deals
GETTYHomes can save £300 with the best energy deals

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. A cap suggests a maximum amount that can be charged, not a promise that bills won't go up year on year".

A SCOTTISH THINK TANK has warned that measures outlined by the Conservatives to deal with soaring energy prices would fall short of changes needed to have a just energy system to the benefit of the people.

The move has been widely criticised by the industry and the Tories face accusations of hypocrisy after they attacked an identical promise by former Labour Party leader Ed Miliband at the 2015 General Election.

Others say a cap will damage investment in energy when it is required more than ever. Josh Hardie, its deputy director general, said: "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".

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".

"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". Centrica shares are down 14 percent.

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