Press release: Draft Tariff Cap Bill published by government

  • Draft legislation designed to place a temporary cap on energy prices will be scrutinised by Parliament
  • Publication comes as regulator announces a further million vulnerable consumers are to be protected by its existing price cap this winter
  • Government remains committed to putting an end to households being charged excessive prices for their energy

Draft legislation that would see rip-off energy prices capped for millions of households has been published by the government today (Thursday 12 October).

The Department for Business, Energy and Industrial Strategy has outlined measures in the draft bill that would limit the cost of standard variable tariffs (SVTs) and other default tariffs that customers are moved onto at the end of a fixed-term deal.

Around two-thirds of energy consumers in Great Britain are currently on this type of tariff – that is around 18 million customer accounts, four million of which are on pre-payment meters and are already protected by a price cap.

As Ofgem announced yesterday, a further million vulnerable households will be protected from unfairly high bills this winter, meaning five million people this winter will be protected by price caps.

This has been welcomed but the government believes no-one should be overcharged by their energy company. It is now up to the energy companies and Ofgem to act – if they fail to act, the legislation will ensure customers get a fair deal.

The government will ask the Commons’ Business, Energy and Industrial Strategy Select Committee to scrutinise the Draft Domestic Gas and Electricity (Tariff Cap) Bill. The proposed legislation would mean a cap would run until 2020 at which point the independent regulator, Ofgem, would recommend to government whether it should be extended on an annual basis, up to expiry in 2023.

The Prime Minister 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.

Business and Energy Secretary Greg Clark said:

People who show loyalty to well-known brands are paying hundreds of pounds a year too much on standard variable tariffs and I am determined that this practice should end.

We have published draft legislation today, sending a clear message to the industry that we will protect the interests of their customers if they do act now to tackle the detriment found by the Competition and Markets Authority.

As the Competition and Markets Authority review of the retail energy market found last year, customers of the Big Six suppliers on standard variable tariffs and other default tariffs face a £1.4bn-a-year detriment. The government is determined to tackle this detriment, including through the introduction of smart meters that will enable consumers to see the cost of their energy usage and more easily find the best tariff for them.