Labour peers will make a fresh bid to introduce a relative price cap on energy bills today (27 June).
Shadow energy minister Lord Grantchester has tabled an amendment to the government’s price cap bill when it is debated in the House of Lords.
Under the amendment, Ofgem would be required to cap the differential between the highest and lowest prices charged by each supplier.
The amendment is designed to provide protection for customers once the temporary cap on standard variable tariff (SVT) deals, which is due to be introduced by the bill, comes to an end.
It seeks to hinder the so called “tease and squeeze” tactics critics say suppliers use to lure customers with cut price tariffs and then shift them onto much more expensive SVTs when the fixed rate deals end.
Conservative backbench MP John Penrose campaigned for the introduction of a relative cap in the run up to the bill’s introduction.
However, the government has rejected the proposal in favour of an absolute cap on the grounds that suppliers would get around it by raising their least expensive tariffs.
Lord Grantchester, said: “For far too long, too many households in Britain have paid over the odds for gas and electricity. Teased to switch provider through a chance to cut energy costs, they soon find themselves being squeezed back once the deal ends.
“Worse still, it’s the elderly, disabled, and those on low incomes on the receiving end of this rip-off treatment and they are effectively subsidising more internet-savvy switchers. The relative price cap Labour is proposing looks to put an end to these practices and the prejudice that comes with it.”
The proposed energy price cap is planned to come into effect in December 2018, Ofgem revealed in its price cap consultation overview published last month.