Britain seeks to cap 'rip-off' energy prices

Britain on Monday launched plans for a cap on domestic energy prices, as it cracks down on poor-value tariffs that hurt the most vulnerable.

The government is to present legislation before parliament to limit unit prices charged for electricity and gas, in time for next winter, for customers not yet protected who end up with the highest tariffs.

Britain's privatised domestic energy sector, which is run in large part by eurozone-based companies, has faced criticism over default high tariffs that punish customers who for various reasons do not seek out a better deal by switching provider.

"It's often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways," said Prime Minister Theresa May, who leads the right-wing Conservative Party.

"Our energy price cap will cut bills for millions of families. This is another step we are taking to help people make ends meet as we build a country that works for everyone."

The Domestic Gas and Electricity (Tariff Cap) Bill will allow regulator Ofgem to limit tariffs until 2020, with the option to extend the cap annually until 2023.

The strategy will guarantee price protection for 11 million households currently on the highest tariffs in Britain.

In 2016, the Competition and Markets Authority warned that British consumers were paying £1.4 billion ($2.0 billion, 1.6 billion euros) too much per year on companies' default tariffs.


Explore further

Solar industry on edge as Trump weighs tariffs on panels

© 2018 AFP

Citation: Britain seeks to cap 'rip-off' energy prices (2018, February 26) retrieved 21 July 2019 from https://phys.org/news/2018-02-britain-cap-rip-off-energy-prices.html
This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without the written permission. The content is provided for information purposes only.
18 shares

Feedback to editors

User comments

Feb 26, 2018
Privatized energy = Rip-offs

Feb 26, 2018
Every time social engineers play with the free market costs go up not down.

http://joannenova...es-came/

And then comes the we must help the poor bit after the crap hits the fan.

Feb 26, 2018
Venezuela is a prime example of this. Things are so bad there that the US liberal media refuses to cover the starvation and suffering.

Where are the progressive apologies for this catastrophe?

Yup Britain, closed most of the cheap coal plants and then blamed "Greedy" electric companies when electric prices harm the poor.

Feb 26, 2018
Privatized energy = Rip-offs


Nationalized energy = high prices through inefficiency & corruption.

Pick your poison.

Feb 26, 2018
Heavily regulated privatized energy = reasonable prices.

On Earth. Eikka's spouting rightwingnut ideology again.

Feb 26, 2018
Oh Da how is the nationalized grid doing in Puerto Rico?


Feb 26, 2018
What "nationalized grid" in Puerto Rico? PR is not a nation.

You mean the grid that got destroyed by a hurricane that your butt-buddies won't pay to repair?

Feb 26, 2018
"You mean the grid that got destroyed by a hurricane that your butt-buddies won't pay to repair?"

Yea THAT grid. You know the one that was built in a known hurricane prone area and never updated to meet the threat. Yea the same island that had all of the relief food rotting at the docks because no one had the initiative to dispense it to anyone other than crony insiders.

Feb 26, 2018
I don't think any of what you claimed there actually exists in reality, any more than the "nationalized grid" claim you made and tried to sweep under the carpet does. Where did you get these claims? Stormfront? Drudge Report? Some other fake news site?

If you're just going to lie there's no point in talking to you, @MR. I hope your grid gets wrecked and you get screwed the same way.

Feb 27, 2018
Heavily regulated privatized energy = reasonable prices.

On Earth. Eikka's spouting rightwingnut ideology again.


The problem isn't in the regulation, but in the lack of competition. The government may set the prices, but the government doesn't know what the price should be or could be, so they're liable to believe the producers when they say it costs so and so much. Putting the responsibility up top puts the burden of choice on fewer people with diminished access to information.

It's left to the (in)competence of the government to choose, which is also subject to pork-barrel spending and other corruption as it inevitably happens and leads to reduced efficiency because of non-optimal spending choices - like putting up wind turbines in non-optimal locations just to please your constituents and get federal subsidies into your own home county/state.

Feb 27, 2018
On Earth. Eikka's spouting rightwingnut ideology again.


It's actually a page on the book of systemantics: reality is what is reported to the system. The government exists under a non-reality of what they can measure and what is reported to them, and how they interpret the situation - or how they want to interpret it.

The government can't just tell the producers "you have to use this and that technology and it has to cost only this much". That almost never works - either it actually costs less and the producers are making undue profit for not having to compete, or it costs more and is actually impossible to achieve the task, and the producers are forced to cheat by pushing the difference in cost to some externality.

By the time the government realizes this, the system has already gone wrong and they're stuck with an inefficient energy infrastructure running on subsidies and imports.

Feb 27, 2018
Most of the time when the government tries direct intervention of the market, it goes horribly wrong.

Like the time when Margaret Thatcher's government tried to regulate the NHS by demanding waiting times to be less and increasing the number of beds for patients, without giving them more money to spend because they had promised to keep the costs down.

The hospitals responded by taking the wheels off trolleys and calling them beds, and by putting "Hello nurses" to recieve the patients, only to leave them waiting again for the actual doctor, so they could count them as being seen to.

Or another case where the NHS was buying physiotherapeutical balance boards for $25,000 a unit, which turned out to be no better than Wii-Fit boards that cost about £25 from the manufacturer. As long as you can push the cost up to the taxpayer and say "it just costs this much", what competence does the government have to disagree? They're not doctors or engineers, they're politicians.


Feb 27, 2018
I don't think any of what you claimed there actually exists in reality, any more than the "nationalized grid" claim you made and tried to sweep under the carpet does.


https://en.wikipe...uthority

The Puerto Rico Electric Power Authority (PREPA) —Spanish: Autoridad de Energía Eléctrica (AEE)— is an electric power company and the government-owned corporation of Puerto Rico responsible for electricity generation, power distribution, and power transmission on the island.[1] PREPA is the only entity authorized to conduct such business in Puerto Rico, making it a government monopoly. The authority is ruled by a board of directors appointed by the governor with the advice and consent of the Senate.


What "nationalized grid" in Puerto Rico? PR is not a nation


Puerto Rico is an unincorporated territory of the US with its own government and governor, and a local constitution.

Feb 27, 2018
https://www.vox.c...ts-facts

PREPA, the electric company on the island, has a massive $9 billion debt, as Vox's Alexia Fernández Campbell has explained, and in July it defaulted on an interest payment. For years, it hasn't had the money to invest in modernizing Puerto Rico's electrical systems. Even without hurricanes, power outages are frequent on the island.


As Vox's Fernández Campbell explains, Puerto Rico's government is broke. Its infrastructure is aging and in disrepair on a good day. And it can't borrow money to fix it. In May, Puerto Rico — which has a $103 billion economy — declared bankruptcy, and it has since then been trying to restructure more than $70 billion in debt. The island's finances are currently controlled by a federal board, which made just $1 billion available for relief

Feb 27, 2018
So, the question of whether the power grid in Puerto Rico is nationalized isn't a question of whether or not it's under government control, but simply, which nation? Technically, it's nationalized by the US government which delegates authority to the governor of Puerto Rico to appoint the PREPA board.


Feb 27, 2018
Thanks for the support Eikka but Da was just being pedantic in order to deny the main point that government almost always does more harm than good when it controls the day to day operations of an industry.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more