Conservatives target energy costs instead of price caps

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19 May, 2017

Conservatives target energy costs instead of price caps

The conservative party is expected to dilute the threat to energy suppliers by introducing a cut down plan to cap bills ahead of a fresh review into the rising cost of Britain’s electricity.

The Tory party said its drive to bring down Britain’s energy costs to be the lowest in Europe, and its manifesto included plans to reignite the shale industry by offering a bigger slice of a sovereign wealth fund to those who welcome local drilling.

“We want to make sure that the cost of energy in Britain is internationally competitive, both for businesses and households,” said the party.

The promise made no mention of the £100 savings for 17 million customers promised by Theresa May earlier this month. A new addition to the Tory manifesto is the pledge to tackle rising energy bills by putting in place a safeguard tariff cap for an unspecified number of customers who have the worst value tariffs. The cap will also include bills paid by micro businesses.

“The manifesto wording was vague, as expected, but hints that the impact for the industry may be much less than we feared,” said Deepa Venkateswaran, an analyst at Alliance Bernstein.

Mrs May had pledged a hard-line, market-wide cap on all standard household energy tariffs, but the party line appears to have softened the stance in characteristic fashion, following harsh criticism that the move would stifle competition. The party has promised to maintain the competitive element of the retail energy market by backing initiatives to make the switching process easier and more reliable.

“Alongside giving individuals greater control over their energy bills and protecting customers from unfair bills, we will help them to save energy,” the party added. Its energy efficiency drive would include a commitment to upgrading all fuel poor homes by 2030 and revising requirements for new homes too… An energy efficient home is a more affordable and healthy home,” the party said.

It came as a relief to the fraught energy industry which has lost hundreds of millions of pounds in market value since the price cap plans were announced. SSE shares rose 2.3% to around £15 and Centrica climbed 4% to £2.

Ms Venkateswaran said the manifesto suggests that the cap is not intended to save money on current bills but to prevent unfair future pricing. The Government cap would start at the highest standard tariff in the market, rather than the average, and would sit just above current ‘reasonable prices’.

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