Bills are actually higher because of energy price cap, experts warn

BILLS are higher because of the energy price cap, experts have warned.
The Ofgem-imposed ceiling is blamed for “actively harming” market competition and even pushing up inflation.


The Ofgem-imposed price cap is blamed for ‘actively harming’ market competitionCredit: PA

Although introduced in 2019 with the “best intentions” of saving hard-up families, researchers now say it has become a de facto “state price control”.
The cap on energy costs was originally established to protect vulnerable customers unable to switch providers, but has since been expanded to cover 29 million households.
A new report from the influential Centre for Policy Studies says for the past two years firms have all virtually set tariffs at the price-capped level.
It warns “the government is effectively setting the market price for energy, eliminating any chance of customers switching to a better deal.”

Author Dillion Smith said: “Contrary to its original intent, the energy crisis has transformed the Energy Price Cap from a genuine cap to a state price control for virtually the entire market.”
He added the result was “significantly higher prices for consumers and driving inflation”.
And instead ministers should abolish the price cap to return to a retail market where providers jockey to lure customers with competitive prices.
The price cap is currently locked in at £2,074 until September 30, when it is expected to fall to around £1,860 to reflect plummeting wholesale costs.

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Putin’s invasion of Ukraine saw energy prices soar as Western countries shunned cheaper Russian gas.
Last year then PM Liz Truss introduced an Energy Price Guarantee which froze costs below the Ofgem cap to protect struggling billpayers.
Dr Craig Lowrey of Cornwall Insight analysts said: “’Despite recent reductions in the Default Tariff Cap (price cap), households are still facing bills that are well above historic levels.
“This has raised questions about the cap’s purpose, its efficacy in safeguarding consumers, and its impact on tariff competition.”