UK government may introduce cap on fuel bills

For the first time in over a decade, the UK the government may introduce a cap on fuel bills, the regulator Ofgem told The Independent newspaper. The move would come as concerns rise that customers may be ripped off by the Big Six energy firms.

The regulator said, the dominant companies – EDF, E.on, British Gas, Scottish and Southern, Scottish Power and Npower – would have to overhaul their confusing and expensive tariffs this year if they wished to escape tougher action.

One solution could be a Competition Commission inquiry into the whole industry which could force a break-up of its dominant players, that have between them, 99 per cent of the market.

The other was imposing price controls for the first time since 2002, that would affect all 22 million households in Britain. According to Ofgem, parliament had given it the task of trying to create an effective market where competition was the downward pressure on prices.

It added it thought that was the way to go, although it had not ruled out regulation, particularly for more vulnerable customers, if its reforms did not work.

Bills have increased 100 per cent since 2005 to £1,250 a year, which has left 5.5 million households in fuel poverty, spending 10 per cent or more of their income on power.