Caroline Flint

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MP calls on PM to stop dithering over energy price cap

Energy campaigner Caroline Flint today called on the Prime Minister to scrap their draft energy price cap bill and introduce a price cap now.

The MP has campaigned for a price cap for all standard variable tariff customers, says the Government has ample powers but their policy is beset by confusion and indecision.

“After months of indecision, the PM finally promised an energy price cap, which Greg Clark said could be in by this winter. Then they offer up only a draft Bill, which guarantees nothing happens for months.

“The PM should know that the Energy Act 2010 gives Clark the power to bring an Order before the Commons now to introduce a price cap.

“I don’t know whether the delay of publishing a draft Bill is simply incompetence or resistance within the Government to intervening in this market. Either way millions of people face higher bills this winter, unless the Government gets its act together.

The MP’s demand comes the same day Ofgem announced a price cap for 1 million more vulnerable customers. Ofgem’s action arose from a letter of instruction from Greg Clark in June, which asked to "extend the price protection currently in place for some vulnerable customers to more customers on the poorest value tariffs."

Said Caroline: “Help for vulnerable customers is welcome, but Ofgem’s action has been overtaken by the PM’s pledge to end unfair energy prices for the sixty per cent of households on the standard variable tariffs – the most expensive default tariffs. Clark even suggested that prices could be capped by this winter. That isn’t going to happen via a draft Bill; it needs Government to act now.”


Under Section 26 of the Energy Act 2010, the Secretary of State has the power to introduce a price cap if one group of customers is treated less favourably than other customers by an energy supplier.
Section 26 reads:
“If the Secretary of State considers that some customers of an energy supplier (the “disadvantaged customers”) are treated less favourably than other customers of the energy supplier (the “advantaged customers”) as respects charges for energy, the Secretary of State may by regulations make a scheme for the adjustment of charges for energy with a view to eliminating or reducing the less favourable treatment.”
The act is clear s/he can make any assumptions or calculations needed to proceed.
The Secretary of State may make such assumptions and calculations as he or she considers to be appropriate for the purposes of this section, including assumptions and calculations to enable him or her to take into account—
(a)different charges for the same kind of energy, or
(b)charges for different kinds of energy.

Regulations implies bringing an Order before the House - a statutory instrument.

"We’ve said it would be better and quicker if they [Ofgem] used these powers straightaway," Mr Clark told the BBC's Today programme.
Mr Clark suggested that Ofgem should introduce the price cap, but he knows the energy companies can appeal this; and delay it.
The only way to get a price cap through by winter is for Clark to use the legal power he already has.

If Greg Clark really believed that Ofgem has the powers to price cap all standard variable tariffs, then why hasn’t he written to Ofgem to tell them to get on with it. That is what he did in June, when he asked them to help vulnerable customers. By July they were consulting on proposals

A draft Bill to give Ofgem legal force to introduce a price cap is a timewasting measure. Draft Bills have a usual 12 weeks pre-legislative consultation. This means legislation is unlikely until 2018.

Caroline Flint questions Clark at BEIS Oral Questions on 12 September.
Caroline Flint: The Secretary of State knows that the concern for Ofgem, even though it has the power, is that energy companies would appeal to the CMA and frustrate the process. What he has not acknowledged today is that, under section 26 of the Energy Act 2010, he already has the power to introduce a price cap if one group of customers is treated less favourably than other customers by an energy supplier. Why does he not seek measures to introduce the power he already has?

Greg Clark: Ofgem is the regulator, and it had a report from the Competition and Markets Authority saying that consumers are being ripped off to the tune of £1.4 billion a year. We have a regulator with powers given by Parliament, and those powers should be used. That is the challenge for Ofgem. I would be very surprised and very disappointed if any of the big six, knowing the objectivity of the CMA report, were to protest and appeal against such a determination.

The Ofgem announcement can be found here:

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