18 million energy customers to see bills capped by government

18 million energy customers to see bills capped by government

The draft bill published on Thursday said the price cap would initially last until 2020, with the potential to be extended by up to three years if needed.

The government said in a statement, however, before full draft legislation due later this morning: "The need for it would be kept under review, and extensions could be made, on the advice of Ofgem, up to the end of 2023 at the latest".

"I have been clear that our broken energy market has to change - it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much", said May.

But after 192 MPs of all parties wrote to the PM in September complaining that poorer customers were being preyed on by energy firms, Mrs May revived the plan and backed a price cap in her recent Tory conference speech.

But, it gave no precise detail for businesses keen to see how much it would cost them, other than to say it would be an absolute price cap, as opposed to a relative one based on the difference between the cheapest and most expensive tariff.

Ofgem said it would now consult the industry on its safeguard tariff for SVTs while the government's draft bill passes through parliament, and said suppliers in the meantime must step up efforts to provide better value deals.

The energy regulator Ofgem has announced it will extend its price cap to one million more vulnerable households this winter.

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She said: "Due to the Government's dithering, the four million households in fuel poverty - nearly one million of which includes a disabled person - will face another winter of cold homes and astronomical bills".

Business and Energy Secretary Greg Clark said: "The energy market is broken. As it will take some time to come into effect, customers sitting on expensive standard variable tariffs should switch now". It's great that we're moving on to think about how, rather than if, we make it happen. "An absolute cap would throttle competition, be out of date as soon as the wholesale price of gas goes up or down, and energy firms would spend more time lunching their regulators than delighting their customers".

The regulator is also working on plans to extend its price protection plan to a further 2 million vulnerable households by next winter, but Nolan said this would be dependent on the timing of the government's legislation.

Britain's energy market is dominated by the so-called big six providers - Centrica's British Gas, SSE, Iberdrola's Scottish Power, Innogy's npower, E.ON and EDF Energy, which account for about 85 percent of the retail electricity market.

What is a standard variable tariff?

Customers are still likely to be better off by searching and switching themselves.

Ofgem had already proposed intervening in the part of the market that supplies more vulnerable customers.

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