UK to cap energy prices from next winter

A UK government plan to cap the most common form of gas and electricity tariffs for millions of  households in the country would not come into effect in time for this winter, energy regulator Ofgem said yesterday.

Prime minister Theresa May announced last week a plan to impose price caps on standard variable tariffs (SVT), the basic rate charged by suppliers if a customer did not opt for a specific fixed-term deal.

The government will announce further details of the proposals today.

Ofgem chief executive Dermot Nolan did said he did not know how long it would be for the government bill to become law. However, the regulator would start capping bills five months after the bill became law.

Around 70 per cent of households are on standard variable tariff and Prime Minister May had earlier indicated a cap could cut average energy bills by around £100 a year.

Following passage of the law, Ofgem would need to launch a statutory consultation process of around 50-60 days and then allow energy suppliers further time to implement the measure, meaning implementation by this winter would be out of question.

''I cannot comment on next winter as it depends how quickly the bill will go through,'' Nolan told journalists during a telephone briefing Reuters reported.

Meanwhile, Ofgem yesterday vowed to expand the price cap for customers using pre-payment meters to include 1 million households considered socially vulnerable.

Prime Minister Theresa May said, ''I have been clear that our broken energy market has to change – it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much.

''Today's publication of draft legislation is a vital step towards fixing that, and in offering crucial peace of mind for ordinary working families all over the country.''