The Big Deal – “Theresa May backing a price cap is good news for exploited families but she must now deliver. She’s said this before and then backtracked.”

Today (4th October 2017) Theresa May set out plans to introduce a price cap on energy bills for all households. The Conservative Party manifesto also set out the same policy but after the election she backtracked and Ofgem said the price cap would be for just 2 million households.

  • 13 million households are on the Big Six’s worst tariff paying on average £1,151 which is £317 more than the cheapest deal on the market.
  • A shocking 8 million households have been on the Big Six’s worst deal for more than 3 years.
  • Centrica’s (British Gas’s parent company) share price fell by 2.6% and SSE’s fell by 1.9% this morning.

The two biggest energy switching sites uSwitch and MoneySupermarket have attacked the cap. uSwitch claim it will be the “death knell for competition” and MoneySupermarket said it would be a “disaster”. The Big Deal is the only switching site to support a price cap.

Will Hodson, co-founder of collective switching site the Big Deal, said:

“Theresa May backing a price cap for all households is good news for exploited families but she must now deliver. She’s said this before and then backtracked.

“A cap will protect millions of hardworking families from unscrupulous Big Six practices and price rises.

“A shocking eight million households have been on the Big Six’s worst tariff for three years being overcharged hundreds of pounds every year. The fall in British Gas and SSE’s share price shows that people know their days of big profits are numbered.

“But Theresa May said in her manifesto that she’d would deliver a price cap and then watered it down. This time she must deliver.”

 

 

NOTES TO EDITORS
Centrica’s share price falls by 2.6% following price cap rumours

Source:http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B033F229GBGBXSET1.html

Similarly, SSE’s fell by 1.9% 

Source: http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB0007908733GBGBXSET1.html

Ofgem data reveals 8 million have been exploited by the Big Six for more than three years

Table showing number of non-prepay customer accounts by tariff type and supplier

Fixed tariff Other non-standard variable tariffs SVT (less than 3 years) SVT (more than three years) Total on SVT Total amount of customers % on SVT
British Gas 2,194,058 0 1,836,861 3,010,876 4,847,737 7,041,795 69%
SSE 630,928 349,861 966,202 1,531,095 2,497,297 3,478,086 72%
E.ON 1,056,667 9,366 1,000,804 1,247,809 2,248,613 3,314,646 68%
EDF 1,337,547 0 762,279 795,247 1,557,526 2,895,073 54%
Scottish Power 1,551,331 50,127 393,728 640,698 1,034,426 2,635,884 39%
RWE npower 1,187,211 546 450,843 795,726 1,246,569 2,434,326 51%
Total 7,957,742 409,900 5,410,717 8,021,451 13,432,168 21,799,810 62%

Source: Ofgem, August 2017,  https://www.ofgem.gov.uk/data-portal/retail-market-indicators#thumbchart-c7770745751913637-n114504

Price comparison sites say a cap will damage competition:

Richard Neudegg of biggest energy price comparison site uSwitch said:

“A price cap would be the death knell for competition. It would remove any incentive for energy companies to drive down prices and fight to keep their customers, entrenching the position of the incumbent big six. It would create a false sense of security for consumers on poor value SVTs, reducing the chance of them seeking a cheaper deal.” (https://www.uswitch.com/media-centre/2017/04/uswitch-comments-on-reports-of-energy-price-cap-pledge-in-conservative-manifesto/).

Stephen Murray of MoneySuperMarket, said:

“For customers who have the ability to switch – majority outside the most vulnerable – an energy price cap would be a disaster.” (http://www.cityam.com/264080/conservative-plans-energy-cap-could-cost-consumers-upwards)


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