Prime Minister's announcement on an Energy Price Cap

• ·         The energy market hasn’t been working for ordinary consumers. For millions of families, energy bills are far too high – in particular, those on “standard variable tariffs” (SVTs)

• ·         What we are doing is publishing a draft bill next week that would give Ofgem powers to impose a cap on SVTs over the whole market. Ofgem are expected to come out with their plans for how they will safeguard customers on the poorest value tariffs. If their plans do not go far enough, this power will enable them to go further.

• ·         Our plan still preserves the workings of the competitive market and the principle of arms-length regulation. It will be up to Ofgem to set the level of the cap. There should be savings for customers on bad deals, but enough headroom for there still to be a reason for people to shop around.  And this measure is intended to be temporary, while innovations such as smart meters arrive and enable the market to work properly for everyone

ENDS

Notes to Editors

• ·         Currently almost 60% of all bill payers are on standard variable tariffs .
• ·         According to Ofgem, in August the bill for a typical dual fuel household on the standard variable tariff with one of the Big Six energy suppliers was £1142. 
• ·         In contrast the cheapest tariff at a Big Six supplier was £865 – a difference of £277
• ·         According to Ofgem there were around 19m domestic energy accounts on SVTs in October 2016, 4m of whom are on prepayment meters.
• ·         In 2016 research from the Competition and Markets Authority found customers to be paying £1.4bn more than they would in a fully competitive market.
• ·         It is not the same as Ed Miliband’s price freeze, which froze prices wherever they happened to be, and overrode the regulator. And Corbyn’s idea of a £1000 limit would have failed for the same reason.