(Bloomberg) -- Prime Minister Theresa May will set out plans to limit domestic energy prices when she addresses her Conservative Party's annual conference on Wednesday, Energy Secretary Greg Clark said.
The action would follow through on the Tories' manifesto pledge -- copied from a similar policy first proposed by Labour -- to rein in the so-called Big Six utilities. Last year, the Competitions and Markets Authority said consumers were overpaying on their bills by 1.4 billion pounds ($1.9 billion) a year by remaining on default fares instead of changing suppliers.
“It's been my consistent view throughout that we can't stand by and see this amount of detriment to the consumer uncorrected,” Clark said in a Bloomberg TV interview on Wednesday. “The prime minister is going to be saying something about this in her speech later in the morning.”
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Until now, the government has left the matter in the hands of the energy regulator Ofgem, which Clark instructed to look at the matter after the general election in June. The regulator in July said it was looking into introducing a safeguard tariff for “vulnerable” customers, a category the organization's Chief Executive Officer Dermot Nolan said would cover about 2.2 million people. That's far short of the 17 million the government says are affected.
“I've always been clear that if the regulator won't act, we clearly have a consensus now in Parliament that this needs to be eradicated,” Clark said. “I won't hesitate to act if that's required.”
May's announcement will come days after some 192 lawmakers, including 76 Conservatives, wrote to her and Clark urging her to introduce the cap “to stop this Big-Six stitch-up.”
Public anger has mounted against the utilities as each of them raised their charges this year even as wholesale power prices fell. The Big Six are: Centrica Plc's British Gas unit, Electricite de France SA, SSE Plc, Innogy SE's Npower unit, Iberdrola SA's ScottishPower business and EON SE.
The utilities have said they need to make a fair margin on the prices they charge in order to invest for the future. They've also pointed to mounting costs they face to meet government targets for renewables, energy efficiency, installing smart meters and subsidizing poorer households.
--With assistance from Jessica Shankleman
To contact the reporters on this story: Alex Morales in Manchester, England at amorales2@bloomberg.net, Anna Edwards in London at aedwards49@bloomberg.net.
To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Emma Ross-Thomas
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