Theresa May announced plans to keep previous promises of an energy cap, saving 12 million customers an average of £100 a year.
Speaking at the Tory party conference in Manchester, Theresa May said that the UK’s energy market was in need of fixing.
“The energy market punishes loyalty with higher prices, and the most loyal customers are often those with lower incomes, the elderly, people with lower qualifications and people who rent their homes,” she said.
Energy companies took a hit in shares as the news the announced. Shares in Centrica (LON:CNA), the parent company of British Gas, hit a 14 year low, falling by over 6 percent after the announcement.
SSE (LON:SSE) shares also took a hit and fell to their lowest level since 2016.
“SSE believes in competition, not caps, so if there is to be any intervention it should be simple to administer, time-limited, and maintain the principles of a competitive energy market to best serve customers’ interests,” said SSE, following the Prime Minister’s speech at the Tory conference.
Regulator Ofgem has supported the party’s decision to cap energy prices, saying their number one priority is protecting vulnerable customers.
“We share the government’s concern that the market is not working for all consumers, especially the vulnerable, and will work with the government on their plans announced today to better protect consumers on poor value deals,” said a spokesperson from Ofgem.
The suggested price cap will affect 12 million customers and save an average of £100. However, it will not come into practice until winter 2018-19 and will only be temporary.
Not all were in favour of the government’s promised price cap. Lawrence Slade, Energy UK’s chief executive, said the move could stifle competition.
“Over three million consumers have switched already this year and the number of standard tariffs have fallen by almost a million in the last six months,”
“It is important that we do not risk halting this growth of competition and engagement in the market.”