Government price cap to limit energy bills for 15m homes

Theresa May has said that she wants to cap tariffs for all 12 million households on poor value standard tariffs

The watchdog said it would need legislation in place to enforce a cap on default tariffs.

That move will, on average, save households £120 a year, the regulator said.

It punishes loyalty - the independent competition authority found millions of people who are customers of the Big Six suppliers are overpaying to the tune of £1.4 billion a year.

The BBC understands that Ofgem is reluctant to do so because it believes energy companies could challenge its decision.

Draft legislation created to lower the cost of energy bills is set to be published by the government later. However, the regulator would start capping bills five months after the bill became law.

Rebecca Long-Bailey, Labour's shadow business secretary, said legislation must force the regulator to implement a price cap.

What is a standard variable tariff?

Ofgem said it would now consult the industry on its safeguard tariff for SVTs while the government's draft bill passes through parliament, and said suppliers in the meantime must step up efforts to provide better value deals.

It will apply to anyone on a standard variable tariff, the expensive plans that customers are moved to when cheaper, fixed deals end. Customers are still likely to be better off by searching and switching themselves.

Following the initial announcement by May at the Conservative party conference, two United Kingdom listed energy companies, Centrica and SSE saw a total, combined total of £900 million wiped off the value of their companies.

"I would challenge the entire industry to say the standard variable tariffs are not good deals". But, it gave no details on how the cap would be set.

Mr Nolan, perhaps, sees the next twist in the price cap saga's plot.

The Prime Minister bowed to mounting pressure over the cost of gas and electricity bills and announced an energy cap during her disastrous conference speech in Manchester last week.

In mid-afternoon trading, energy firms Centrica - who owns British Gas - SSE and German provider RWE, were all trading in positive territory.

The cap would be a temporary measure, running until the end of 2020 at the latest.

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