1. ITV Report

Energy price cap legislation revealed

An "absolute cap" is to be imposed on "rip-off" energy tariffs, the Government has announced.

Details of what the cap will be have yet to be disclosed as draft legislation was put forward in Parliament.

But it is unlikely to be imposed before winter - and is only a temporary measure.

When it comes into force, the Draft Domestic Gas and Electricity (Tariffs Cap) Bill is designed to protect more than 18 million households in Britain.

What we know about it the cap so far:

  • It will benefit customers on standard variable tariffs
  • But the cap is only temporary until 2020
  • This could be extended to 2023

The Government said it had taken the step because the energy market "does not operate in the interests of the majority of consumers".

"While we are in favour of free markets, we will always take action to fix them when they're broken," it added.

ITV News Consumer Editor Chris Choi said there are "real concerns" that if the Government triggers the wrong kind of price cap, it could play right into the hands of the big power firms.

"If people feel reassured and comfortable about the deals they're on because of this, they might stop switching which would help the big firms.

"The firms could also counteract this by removing some of their better deals."

The Big Six energy companies are making customers pay £1.4 billion a year more than they need to. Credit: PA

The Competition and Markets Authority (CMA) found customers of the Big Six energy suppliers on standard variable and default tariffs are paying £1.4 billion a year more than they need to.

The draft bill follows Wednesday's announcement by energy regulator Ofgem that it is to extend its prepayment price cap to one million more vulnerable households this winter.

This will save them £120 a year, although it will not take effect until February.

Plans for the long-awaited legislation was a key announcement made by Prime Minister Theresa May in her party conference speech last week.

"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," she said.

Prime Minister Theresa May unveiled the Government's energy cap plan at the Tory Party conference. Credit: PA

Labour called the legislation "too little too late" and said it will not protect the most vulnerable customers this winter.

"It is another Tory broken promise, " a party spokesman said.

"If the Conservatives had implemented their manifesto commitment in June instead of repeatedly dithering, rowing back and passing the buck to Ofgem consumers could have already been protected.

"We still do not have final details as to when a cap will be in place, what form it will take nor by how much bills will be reduced. It again passes the responsibility to Ofgem.

"Labour would immediately introduce an emergency price cap to ensure the average household energy bill remained below £1000 a year, whilst transitioning to a fairer system for bill payers."