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Energy price cap plans to be published

12 October 2017

The absolute cap on all standard gas and electricity tariffs promised by Theresa May would be a temporary measure set by Ofgem, the energy regulator, and designed initially to last until the end of 2020.

Energy prices could be capped until 2023, the government has said, as it unveiled draft legislation to limit bills for up to 15 million households.

At present about 18 million customers are on some form of default tariff, which can cost hundreds of pounds a year more than the cheapest deals.

Ministers confirmed that energy regulator Ofgem would be compelled to implement the cap once the law had given it new powers.

The draft legislation will be scrutinised by a select committee of MPs.

In the meantime it said it was introducing new rules to allow suppliers to roll customers coming to the end of their contracts onto another fixed deal instead of a poor value standard variable tariff.

"I have been clear that our broken energy market has to change", the Prime Minister said.

"Today's publication of draft legislation is a vital step towards fixing that and in offering crucial peace of mind for ordinary working families all over the country".

"At best, it is a short-term solution which could see some households on the worst value tariffs pay a little bit less for their energy".

Four million of those are on pre-payment meters.

Ofgem will consult on the design of the safeguard tariff for default deals while the Government's draft bill progresses through Parliament.

The bill will be published about mid-morning on Thursday, with the business secretary, Greg Clark, due to to make a statement in the House of Commons.

"That is simply wrong".

Labour says the Government's proposed legislation does not go far enough.

However, the ceiling on energy and gas bills is not expected to take effect until the winter of 2018/19 at the earliest.

"The Government dithered for so long, arguing with the energy regulator, before finally being forced to take any action that it seems unlikely consumers will really benefit".

Alex Neill, managing director of home products and services at consumer group Which?, warned that while the cap might sound like a positive move for customers, the government must be careful that it does not undermine customer service and push up prices as a whole. Around 18m customers are now on SVTs or other default tariffs.

Energy price cap plans to be published