Will the energy price cap affect businesses?
Price cap for businesses?The Prime Minister’s price cap announcement did not directly implicate businesses. Her conference speech focused on the impact on vulnerable consumers whose misguided ‘loyalty’ was being punished. “And one of the greatest examples in Britain today is the broken energy market,” Theresa May said. She continued: “The most loyal customers are often those with lower incomes: the elderly, people with lower qualifications and people who rent their homes. Those who for whatever reason, are unable to find the time to shop around.” The speech contained little ‘meat’ of the policy. The party’s 2017 manifesto contained more information about the policy. It is important to understand how the final policy could look if we are to understand the direct and indirect effects it could have on businesses. “Energy suppliers have long operated a two-tier market, where those constantly checking for the best deal can do well but others are punished for inactivity with higher prices. “We will introduce a safeguard tariff cap that will extend the price protection currently in place for some vulnerable customers to more customers on the poorest value tariffs … the safeguard tariff cap will protect customers who do not switch against abusive price increases.” We can gleam three key points from the policy details here and elsewhere.
- The bill will give the regulator Ofgem the power to impose a cap on standard variable tariffs across the whole market. Standard variable tariffs account for a large part of the market
- It will be up to Ofgem to set the level of the cap
- This measure is intended to be temporary, until "innovations such as smart meters arrive and enable the market to work properly for everyone"
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