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PRESS: UK Regulator Says Energy Price Cap Possible By Christmas 2018

Thu, 11th Jan 2018 12:12

LONDON (Alliance News) - UK energy regulator Ofgem has said a plan to cap standard variable energy tariffs for millions of British households could be implemented by Christmas this year, the Independent newspaper reported on Wednesday.

Prime Minister Theresa May promised in October to introduce legislation ending "rip-off" energy prices through a price cap on bills.

Ofgem Chief Executive Dermot Nolan said that an energy cap would need to become law before parliament's summer recess, which begins in July, if a cap is to come into force before the end of the year.

Should the law be passed, Ofgem would need to launch a statutory consultation process of about 50 to 60 days, after which energy suppliers would be given a further grace period to implement the necessary measures.

Nolan was questioned by the UK Parliament's Business, Energy, & Industrial Strategy Committee as part of its pre-legislative scrutiny of the government's draft bill to cap energy prices.

According to the newspaper, annual energy bills in Britain have reportedly doubled over the past decade, increasing by around GBP1,200 per household.

Ofgem figures show that 57% of households, representing about 13 million people, are on standard variable rate tariffs, which are typically the most expensive. If a customer does not choose a fixed term deal, energy suppliers charge the standard variable rate.

Nolan admitted that Ofgem should have done more to help vulnerable customers earlier.

Committee Chairwoman Rachel Reeves accused Nolan of behaving “like a bystander rather than an active participant in the market” and challenged him over Ofgem staff bonuses, which reportedly totalled GBP921,000 in the 2015/2016 tax year. Nolan responded that bonuses were calculated according to civil service guidelines.

In February, Ofgem is introducing a tariff to safeguard around a million vulnerable customers from overpaying on their energy bills. The regulator has said it plans to extend the scheme to two million more households next winter.

Data published by Ofgem in December showed that among Britain's six largest energy suppliers, SSE PLC had the largest percentage of customers on standard variable tariffs at 71%. British Gas, owned by Centrica PLC, had 67% of its customers on standard variable tariffs, and E.ON had 61%.

By Toby Woodall;

Copyright 2018 Alliance News Limited. All Rights Reserved.

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