Britain’s regulator on Thursday proposed a price cap on default dual fuel energy bills of 1,136 pounds a year, which it hopes to implement by the winter, following a government promise to tackle “rip-off” prices.
The energy regulator, Ofgem, said it would review the price caps twice a year until 2023, by which time it aims to have introduced measures that would increase competition in the UK electricity and gas markets.
The price cap applies to the so-called standard variable tariff (SVT), the most popular type of rate offered by the big six energy suppliers, as well as other default deals. Customers on SVT pay on average 1,185 pounds a year.
The suppliers, controlling 80 percent of the market, are Centrica’s (CNA.L) British Gas, SSE (SSE.L), E.ON (EONGn.DE), EDF Energy (EDF.PA), Innogy’s (IGY.DE) Npower and Iberdrola’s (IBE.MC) Scottish Power.
They have tried to cut the number of customers on that tariff but at the same time raised prices since the government said it aimed to cap prices.
Ofgem’s cap is at the lower range of analysts’ expectations, who pegged it at between 1,120 and 1,200 pounds. The regulator said the 11 million customers protected by the cap would save between 75 and 120 pounds a year.
Home power bills have doubled in Britain over the past decade despite liberalisation of the market and an expansion of the number suppliers.
An influential committee of lawmakers called the energy market “broken” while Prime Minister Teresa May said the energy tariffs were a “rip-off”.
Suppliers, however, blame rising wholesale prices and policy costs for the retail price increases.