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Thursday, October 05, 2017

Theresa May criticised for 'anti-competitive' gas bill cap

A former energy regulator has attacked Theresa May's "anti-competitive" plan for a cap on gas and electricity bills and urged her to slash "rip-off" standing charges instead.

Economist David Osmon, who worked at industry watchdog Ofgem until June, said his plans would save households £100 a year and could be implemented immediately by Ofgem without legislation.

This was in contrast to the proposals announced by the Prime Minister at the Tory party conference for a cap on standard variable tarrifs, which is unlikely to come into force before winter.

Mr Osmon said price caps "have a number of unintended adverse consequences" including reduced switching by customers, cheaper tariffs raised to the level of the cap and less investment.

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Writing for think-tank Ideal Economics, he said suppliers' standing charges - which all customers have to pay - average £156 a year and in some cases were more than £200.

However, the costs they cover, which include providing meters, green initiatives and electricity distribution, only amount to around £60 a year.

Mr Osmon said: "No-one, least of all people on low incomes, should have to pay £160 before they get to access a supply of energy.

"It's like a tax on poor households as it means they pay the highest overall rate for the energy they consume.

"Capping this part of the bill will not only protect those who pay the highest prices for energy but also strengthen competition by making it easier for consumers to compare tariffs.

Read the full story at the Evening Standard