UK: Theresa May criticised for ‘anti-competitive’ gas bill cap

A former energy regulator today attacked Theresa May’s “anti-competitive” plan for a cap on gas and electricity bills and urged her to slash “rip-off” standing charges instead.

In a paper published October 5, economist David Osmon, who worked at industry watchdog Ofgem until June, said his plans would save households £100 (US$131.1) a year and could be implemented immediately by Ofgem without legislation.

This was in contrast to the proposals announced by the Prime Minister yesterday for a cap on standard variable tarrifs, which is unlikely to come into force before winter.

Mr Osmon said price caps “have a number of unintended adverse consequences” including reduced switching by customers, cheaper tariffs raised to the level of the cap and less investment.

Writing for think-tank Ideal Economics, he said suppliers’ standing charges – which all customers have to pay – average £156 (US$204) a year and in some cases were more than £200 (US$262).

However, the costs they cover, which include providing meters, green initiatives and electricity distribution, only amount to around £60 (US$78) a year.

Mr Osmon said, “No-one, least of all people on low incomes, should have to pay £160 (US$209) before they get to access a supply of energy.”
Mr Osmon said: “No-one, least of all people on low incomes, should have to pay £160 before they get to access a supply of energy.

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