David Cameron backs transitional price cap as part of energy market shake-up after CMA report

David Cameron said yesterday that he supported plans for a “transitional” energy price cap.

 

The Competition and Markets Authority (CMA) has called for changes to be made to companies’ standard variable, or default, tariff – the tariff that energy customers pay if they have not made an “active decision” to change. The CMA said around 70 per cent of the Big Six energy firms’ customers are on the default tariff, and also found that from 2011 to 2014, those companies made more money from such tariffs than from non-standard tariffs.

 

The CMA has proposed moving customers who do not choose to leave the default tariff at the end of their existing contract to a transitional “safeguard” tariff. The new tariff would have a maximum price level set by either the CMA or energy regulator Ofgem.

 

A price cap was suggested last year by former Labour leader Ed Miliband, and the Prime Minister has previously positioned himself strongly against such a policy. 

 

Cameron’s official spokesperson said yesterday that the PM’s view on a market-wide price cap has not changed: “It is important that we distinguish between a cap across the market, which the PM has been clear he doesn’t support, and then what the CMA seem to be suggesting which is about safeguards on the most expensive tariffs.”

 

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