The Government’s questionable intend to cap energy prices will affect around 18 million accounts which use standard variable tariffs a minimum of until 2020 and perhaps beyond, based on officials.
The Power Bill is a result of be presented before Parliament later today, and can begin the entire process of putting in a complete market-wide cap on energy supplier tariffs within the most unfortunate intervention within the energy market since its privatisation.
Credit: Julian Simmonds
Under the plans homes in England, Wales and Scotland on Standard Variable Tariffs (SVTs) along with other default tariffs may have the prices limited to least before the finish of 2020, as well as for potentially as lengthy as until 2023.
“It will likely be a complete cap, as well as in setting it Ofgem should have regard to the necessity to: safeguard customers, create incentives for suppliers to enhance efficiency, enable effective competition for domestic supply contracts, maintain incentives for purchasers to change and be sure efficient suppliers can finance their activities,” a Government statement stated.
The move is anticipated to strangle growth one of the largest energy companies, potentially knocking earnings of British Gas owner Centrica where retail energy comprises more than a third of their earnings before interest, tax, depreciation and amortisation, and raising serious questions among its investors over future dividends.
The Bill will need Ofgem to apply the cap “when practicable after legislation is passed”, but is not likely to assist hard-hit consumers before winter, or potentially the winter after.
Ofgem has capped energy prices for purchasers on pre-pay meters, which generally charge too much for energy, and can extend this cover to socially vulnerable consumers qualified for winter heating schemes. This move won’t also are available in quick enough to assist consumers this winter season, Ofgem boss Dermot Nolan accepted yesterday.
A week ago the specter of a complete cost cap drove Centrica’s share cost to 14-year lows.