Price cap on energy bills urgently needed, says committee

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The administration’s planned cap on energy bills should be introduced urgently, to stop clients from being overcharged, a report from MPs says.

Competition was not developing and had failed to deliver fair prices for consumers, a select committee said.

The board said it was «underwhelmed by the feeble steps» taken by energy companies to circumvent government action.

The cap should be temporary and fixed at an «absolute» level, to a certain extent than set relative to other tariffs.

Legislation should be passed rather than the summer recess, the report suggested, which should allow the cap to be in position before the end of the year.

The Business, Energy and Industrial Strategy Committee has been pumping the government’s draft bill to cap energy tariffs, following a commitment run last year by Theresa May.

«The Big Six energy companies might whine and wail hither the introduction of a price cap,» said Rachel Reeves, the committee’s chairwoman.

«But they’ve been overcharging their blokes on default and standard variable tariffs for years and their recent puny efforts to move consumers off these tariffs has only served to highlight the call for for this intervention.»

The report said the larger energy companies had «brought this practice intervention upon themselves by raising their prices in 2017 and by failing to profits effective action against the overcharging of their customers».

The regulator Ofgem was also criticised for being «too behindhand and reluctant» to use its powers to protect the interests of customers.

‘Excessive prices’

The MPs’ examine said 12 million customers «stuck on poor-value» standard inconstant and default tariffs were paying up to £300 a year more their zing than other people.

Standard Variable Tariffs (SVTs) are the most overpriced product in the energy market, and customers have been urged to look for cheaper fixed-price arrangements.

But the report said consumers should not be penalised if they did not shop about.

Five million of the UK’s most vulnerable households, many of whom pay demanding pre-payment meters, already have their energy bills outstripped. But with the cost of producing energy expected to rise in the Spring those households were recently bring to lighted they should expect a rise in their energy bills.

An Ofgem spokesperson affirmed it was pressing ahead with plans to protect energy consumers in guess of the new legislation.

The regulator said «innovative solutions» such as its scheme to hard times «collective switching» which would allow consumers to group together to leave behind better deals, would help households reduce their zing bills Ofgem said.

The Business Secretary, Greg Clark, influenced the report confirmed that » the energy market isn’t working for customers bulged on rip-off tariffs».

He said that the government’s plan to introduce a figure cap would protect consumers from high energy bills.

Tournament concerns

MPs backed the government’s plan for the cap on standard variable tariffs to be set at an «genuine» or fixed level, rather than be «relative» or set at a maximum difference to other dishonest tariffs available to customers.

They said a relative cap might sire a perverse incentive for suppliers to increase their lowest prices to assert overall profits.

Richard Neudegg, head of regulation at the price juxtaposing and switching service uSwitch said any price cap might «do more iniquity than good» if it undermined competition between energy companies.

«A widespread valuation cap could lull energy customers into a false sense of shelter if they think they are protected by it,» he said.

Energy UK, a body illustrating the industry said more customers were already switching suppliers to get safer deals and that the cap could hamper competition.

«It’s also important that the cap accurately considers suppliers’ costs, most of which are out of their direct control,» contemplated Energy UK’s chief executive Lawrence Slade.

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