MPs call for end to energy price ‘stitch-up’
In a cross-party letter to Prime Minister Theresa May, and Greg Clark, the 192 MPs urge the government to introduce an energy price cap to protect the millions of households on pricey standard variable tariffs (SVTs).
It comes as during the election, May promised to bring in a price cap for those on SVTs, but the energy regulator, Ofgem then published a set of watered down proposals only safeguarding two million households.
Earlier this month, Clark, secretary of state for Business, Energy and Industrial Strategy (BEIS) reaffirmed the government’s commitment to the policy but said that Ofgem already has the legal powers to impose the cap, passing the responsibility back to the regulator.
Now, the cross-party group of MPs, including 76 Conservatives, 83 Labour, 32 SNP members and Caroline Lucas for the Green party, has submitted the letter, which states:
“We are writing to urge you to extend Ofgem’s proposals of 3 July 2017 by introducing an energy price cap that protects all of the 17 million families currently on expensive SVT deals, not just the two million vulnerable ones. While these proposals are a step in the right direction it is clear we must do more to protect the further 15 million households who continue to be preyed on by the ‘big six’ energy firms.
“As you can see from our signatures, the idea has substantial cross-party support. It was promised in the three leading party manifestos and a temporary, relative price cap has support from most of the ‘challenger’ energy firms – the insurgents who are challenging the dominance of the ‘big six’ incumbents, and providing choice and stronger competition, which benefits consumers.
“We hope you will work with us and Ofgem to stop this big-six stitch-up, and pledge to help the millions of households who Ofgem seem set to ignore.”
The big six include: British Gas, EDF, E.ON, Npower, Scottish Power and SSE.
John Penrose MP, who organised the letter along with Labour’s Caroline Flint, said: “For decades the ‘big six’ energy companies have ripped off 17 million consumers. Yet Ofgem have chosen to stand idly by, leaving 15 million customers on SVTs to be preyed upon.
“If Ofgem won’t challenge the ‘big six’ and stand up for consumers, the government should replace it and implement the energy price cap itself.”
A widespread price cap won’t solve the energy price problem
Richard Neudegg, head of Regulation at uSwitch.com, said: “A widespread price cap will not solve the problem of some energy customers paying more than they need to for gas and electricity. While they might sound like a quick-fix, such interventions do not actually work in practice.
“Policymakers should focus on increasing competition rather than stifling it. The government should introduce targets for industry to get their customers off poor value deals and make a choice about their energy tariff.
“Simply moving company when a tariff is not good enough keeps pressure on suppliers and saves customers on average £357 a year – far more than could ever be achieved by a widespread cap.”
In response to the letter, a BEIS spokesperson, said: “The government is determined to see the huge detriment suffered by loyal energy consumers addressed. The Business Secretary asked Ofgem to advise on what measures it will take to safeguard consumers and, while we await the regulator’s proposals, we remain prepared to legislate if necessary.”