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  1. ITV Report

Conservatives' energy price cap pledge: what does it mean for consumers?

Theresa May has pledged to impose price caps on energy bills that she says could save households up to £100 a year.

The Conservatives have been lampooned for taking on a policy very similar to one put forward by Labour under Ed Miliband, while energy companies have questioned whether it will effectively lower bills.

Here's everything you need to know about what the Conservatives are pledging and what it will mean.

  • What have the Conservatives pledged?

Theresa May has said that a Conservative government will take action to cut "rip-off" energy bills by imposing price caps.

She has vowed to cut the price of standard variable tariffs by introducing a cap on energy units which would be set by the regular Ofgem.

The majority of British households are on standard variable tariffs, which are described by Ofgem as the "basic rate" offered to those who are not on a specific fixed-rate deal or another specified plan.

Mrs May said the changes would cut bills for around 17 million families who could save up to £100 per year.

The Conservatives have been accused of stealing a policy from Ed Miliband. Credit: PA
  • How does it differ from Ed Miliband's energy proposals?

The plans are similar to proposals put forward by Labour under Ed Miliband in 2013 pledging to freeze all gas and electricity prices for 20 months if it took power.

At the time, the Conservatives said the promise was "unworkable" and a "gimmick", while then Prime Minister David Cameron denounced the plan as based on a Marxist desire to meddle in the energy markets.

Mrs May's proposals are not identical - instead of a flat freeze she is proposing a fixed upper limit set by an independent regulator which offers a great deal more flexibility to respond to changing market conditions.

Nevertheless, having criticised Labour for wanting to interfere in the free market the Conservatives are now proposing to do exactly the same.

Theresa May has been mocked for 'stealing' a Labour policy on energy. Credit: PA
  • Are consumers paying too much?

Many households are paying over the odds, according to repeated warnings from the regulator Ofgem and the national competition authority.

An investigation into the energy markets by the Competition and Markets Authority (CMA) last year found that two-thirds of customers don't shop around - and therefore pay higher rates.

Ofgem has also released league tables of the worst energy deals and urged households to regularly check they are getting a good deal. But despite the warnings, many people find it too inconvenient or simply forget to call around and potentially change supplier.

  • What do the energy companies say?

Their reaction has been negative - though critics would suggest it is because they don't want to back a policy that would cut their profits.

Energy UK, which represents the UK industry, said that the proposed cap could reduce competition and distort the market.

Lawrence Slade, Chief Executive of Energy UK, said energy pricing is "down to each individual company but over the last few months we've seen prices go up across the field" and that consumers needed to "understand why" this was the case.

British gas owner Centrica suggested that tighter profit margins could reduce the number of options available and therefore ultimately drive up bills.

Josh Hardie, deputy director general of British business group the CBI, also warned that the policy "could lead to unintended consequences" such as reducing people's desire to seek out the best deal.