Claire Perry has warned that the government will take an “extremely dim” view of any legal attempt by the big six energy suppliers to thwart the introduction of the household price cap bill in the courts.
Speaking during the concluding debate on the bill, which cleared its last parliamentary hurdles yesterday (18 July), the energy and clean growth minister revealed that she had written to the chairs of the six largest suppliers.
In this letter, she said she had warned the companies that the government would “take an extremely dim view of companies that sought to frustrate the introduction of the cap, for which we have all worked so hard, by some sort of legal challenge.”
Instead of mounting legal challenges to the cap on standard variable and other default tariffs, Perry said suppliers should focus on cutting costs, increasing efficiency and improving their customer service.
But she said it is “absolutely vital” that the cap mechanism, which is currently being developed by Ofgem, is “absolutely watertight so that energy companies do not seek to frustrate further the introduction of this measure.”
Perry expressed confidence that the new powers Ofgem is being given in the bill and the appointment of Martin Cave as its new chair would both help to strengthen the energy regulator’s powers.
The House of Commons yesterday agreed to scrap the amendment, passed by the House of Lords last month, which would have allowed Ofgem to maintain permanently a relative cap on standard variable and other default tariffs.
Labour, which tabled the Lords amendment, agreed to drop it after securing a pledge by the government that Ofgem will conduct a review of the household market before the cap elapses.
This will cover the pricing practices of household suppliers and whether categories of customers paying on default tariffs should be provided with protection against excessive charges.
Conservative MP John Penrose welcomed the move to reverse what he labelled an “open-ended intervention in this market” even though he had campaigned for the introduction of a relative as opposed to the absolute cap that the government has opted for.
He said: “An open-ended commitment would create a great deal of unease among many of us, on the grounds that the opportunity for regulatory meddling would be extremely strong, and that the temptation would prove too hard to resist over time.”
Prime minister Theresa May, said: “For far too long older people, hard-working families and those on low incomes have been subject to rip-off energy tariffs. Our energy price cap will protect households from unfair price rises in time for this winter when people can feel the pinch more acutely.
“We know that the cost of living is still a challenge for some families and today marks an important step in helping people to keep more money in their pockets.
Commenting on the bill’s passage, Alex Neill, Which? managing director of home products and services, said: “The game is now up for energy companies, they must not repeat past mistakes by using this cap as an excuse for their shoddy service and bad deals.
“Action will now need to be taken so that when the cap is eventually lifted this broken market is a thing of the past and all energy suppliers finally compete for customers by efficiently delivering better service and fair prices.”