General election 2017: Energy industry distrusts Tory price cap

Members of the UK energy industry say that a Tory manifesto pledge to cap household bills is not in customers’ best interests.

Full details are not yet known, but it is thought the cap would probably be on standard variable tariffs (SVT).

But British Gas parent firm Centrica, and fellow supplier E.On both said market competition was essential.

And trade association body Energy UK said a cap could risk “billions in investment and jobs”.

‘Deadline’

Scottish Power said that if the Conservatives were going to intervene it would be better to abolish standard variable tariffs, which they said were the cause of the problem not just the symptom of current price pressure.

“As Scottish Power recommended to the Competition and Markets Authority, a deadline should be set to abolish SVT so that all customers can engage even more in the competitive market.”

There were further misgivings from price comparison site uSwitch.com which said “heavy-handed” price intervention could have the unintended effect of leaving consumers worse off.

A price cap has already been introduced for households using pre-payment meters earlier this month – prompted by the release of a report by the Competition and Markets Authority which said customers were overpaying by £1.4bn.

But that report also said it had been found that previous market interventions in the energy sector had contributed to lower switching rates and “softening competition”.

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Source: BBC News, Retrieved 23 April 2017, http://www.bbc.co.uk/news/business-39683815