Politicians promise energy price caps – again

Posted: May 2, 2017 in Energy market, Energy prices

It’s election time which means it must also be time for politician’s to pledge capping residential energy prices… but this time it’s the Conservatives.

Re-wind a few years and it was Ed Miliband promising that Labour would freeze energy prices for 20 months if they won the 2015 election, which generated headlines, hot air and hysteria, while also putting the Conservatives on the back foot.

This time it’s the Conservative party who are reportedly going to cap household energy prices in an effort to reduce the average bill by around £100 a year.

As with the Labour initiative, this raises at least as many questions as it attempts to answer

  • if standard tariffs (never the best option) are capped, what is to stop suppliers raising the cost of their cheaper rates, in the process penalising those consumers who do shop around for the best deal?
  • will the price freeze cover all elements of energy costs?
  • if so, does that means transmission and distribution infrastructure investment will be capped/reduced to prevent prices rises?
  • if energy companies freeze investment in new generation capacity what are the implications for the UK’s ability to keep the lights on?

Five of the Big Six (EDF, Eon, npower, SSE and Scottish Power) have increased prices this year, with only BG holding them (for the time being).


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