MPs unimpressed by Ofgem cap proposal

Energy secretary remains prepared to legislate if regulator's cap is deemed too weak

Ofgem must “go further” to protect energy customers from being ripped off, Greg Clark has said following Labour accusations that the government has betrayed consumers by not capping household bills.

Responding to an urgent question on energy prices from shadow energy spokesman Alan Whitehead, the energy secretary told the House of Commons that the regulator’s initial proposals are “a step in the right direction”.

Ofgem chief executive Dermot Nolan announced yesterday that it would work with consumer groups to extend existing price caps for customers on pre-payment meters to more vulnerable customers.

In an interview with the BBC Radio 4’s Today programme, Nolan said that capping the standard tariff for all customers eligible for the warm homes discount was one of the options being considered.

But Clark said he remained “prepared to legislate” if the regulator’s proposed remedies fail to translate into reduced bills.

He agreed with backbench MP Mike Wood’s suggestion that Ofgem needed to “go much further” than the approach outlined by Nolan.

“This is a wake-up call for the industry. A model in which consumers who are known not to switch can be milked to pay a subsidy for other consumers in an unfair way – the CMA [Competition and markets Authority] identified ‘unilateral market power’, which enables firms to exploit their position – has to come to an end.”

Clark insisted: “I want the detriment that the CMA has identified to be tackled once and for all”. His ultimatum refers to refers to the consumer watchdog’s finding that UK energy consumers were paying out £1.4bn more than they should in bills.

Whitehead said the 17m customers currently on standard variable tariffs felt “completely betrayed” with Ofgem’s package following the government’s pledge to curb bills during the general election campaign.

Clark told Whitehead that he was required to seek Ofgem’s advice before taking action to curb energy prices.

Matt Western, the recently elected Labour MP for Warwick and Leamington, said “The big six are essentially operating as a cartel, not in the interests of the consumer.”