Switching site warns energy price cap could be a ‘disaster’

MoneySuperMarket predicts intervention will lead to cheaper tariffs being pushed out of the market

The price comparison website MoneySuperMarket has claimed Conservative plans to introduce an energy price cap could mean the end of many cheap fixed-rate tariffs.

The website’s energy expert, Stephen Murray, said a cap would “simply push many cheaper tariffs out of the market”, which he added would result in higher prices.

“For customers who have the ability to switch an energy price cap would be a disaster,” added Murray.

“Industry statistics tell us that around two thirds of UK households are languishing on expensive ‘standard’ tariffs, with many paying quarterly. Savings for these customers are on average over £300, or 25 per cent of their bill, yet many still do not switch.”

“The energy market is working better than many people give it credit for. There is more choice for consumers, more innovation by suppliers and an effective switching industry with 50 suppliers to choose from and huge savings to be made.

“A price cap, whether relative or actual, will lead to many of the best deals disappearing, prices finding a higher level and a growing market of disengaged customers,” he added.

The Conservatives indicated last month they are planning to include an energy price cap in their upcoming general election manifesto, which is expected to be published shortly.

“Instead of bringing in a price cap, the government should spend some money raising awareness of switching and leave the mechanics of an increasingly vibrant and competitive market well alone,” said Murray.

Last week, the consumer group Which? said any energy price cap should have a cut-off date and not stifle competition, as part of its manifesto for the upcoming snap election.