Energy UK fights utility industry's corner after Conservatives promise price cap

The trade association for the UK energy industry faces a major communications challenge after Theresa May announced that a future Conservative administration would cap the price of many household energy bills.

The Conservatives are proposing a cap to the price of household energy bills (©Pixabay)
The Conservatives are proposing a cap to the price of household energy bills (©Pixabay)

The party would apply a cap to standard variable tariffs (SVTs), the plan used by 66 per cent of UK households.

Announced yesterday, the policy makes the front page of several UK papers and BBC News this morning. The Daily Mail said that May's policy was "expected to cut £100 from a typical bill", while The Times said there was a "backlash" over the cap, with the industry arguing it would reduce competition and investment in the sector.

A statement today from Energy UK CEO Lawrence Slade said that there was increasing choice and improved customer service in the sector, and warned that such an intervention "risks undermining so many of the positive changes we are seeing in the market which are delivering benefits for consumers".

This echoes the message of a piece by Slade in The Telegraph last month, entitled 'The Government can either safeguard competition in the energy market or undo all the recent progress'.

Abbie Sampson, a former Number 10 adviser who joined Energy UK at the start of the year, said that the proposed price cap was something the organisations "has been aware of for a while", with several Conservatives discussing an intervention in the market in recent months, and Theresa May addressing the issue in her speech to the party conference in the Autumn.

She said: "We’ll be continuing to seek proactive opportunities to reflect the views of our members and highlight the disadvantages, as we would see them, of price-capping, and continuing to engage with politicians and other stakeholders."

Another example of this is the Energy UK manifesto, which Sampson and her team published on 28 April, 10 days after the election was called.

"There can be a lot of out of date statistics out there, so we’re making sure that the debate is based upon accurate information," Sampson went on to say, noting that the Conservatives had yesterday claimed that 70 per cent of the country used an SVT, slightly above the correct proportion of 66 per cent. While Sampson acknowledged that this was a small margin, she said it still represented a large number of homes.

Asked whether the industry might expect voters to be sceptical of a promise that might save them money and be seen as reigning in big business, she said: "There is some myth-busting to do, particularly around the amount of profits energy companies make and the number of people on standard tariffs, which fell by almost a million last year."

Sampson also said that Energy UK would work to "highlight the unintended consequences" of a cap, saying: "We believe competition is delivering real benefits for customers - driving innovation, increasing choice and improving customer service. Further intervention risks undermining the transformation happening in the energy market which is ultimately benefiting customers."

Energy UK's members provide electricity for more than 27 millions homes across the UK and the sector supports 637,000 jobs, according to its website.

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