An energy price cap must be introduced by next winter to stop millions of customers being ripped off, a committee of MPs has said.
The Business, Energy and Industrial Strategy (BEIS) Select Committee backed plans for an absolute cap on gas and electricity prices – rather than a relative cap – but said such a cap must be introduced urgently.
The committee said in a report that the big six energy companies – British Gas, EDF, E.on, Npower, Scottish Power and SSE – have been overcharging for years and have brought plans to limit bills on themselves.
And it says that competition in the domestic energy market is not working effectively for 12 million customers stuck on poor-value tariffs.
The report also urges energy regulator Ofgem to be faster and more proactive in using its powers to protect consumers from overcharging in future.
Business Secretary Greg Clark published draft legislation for an absolute cap on "rip-off" energy tariffs last year, but did not set an exact date for when the cap would start, and it's unclear whether the cap will begin this year or not.
At the time, he said the cap would apply to England, Scotland and Wales and would initially run until 2020.
What does the BEIS Committee say?
Labour MP Rachel Reeves, who chairs the committee, said: "The energy market is broken. Energy is an essential good and yet millions of customers are ripped off for staying loyal to their energy provider.
"An energy price cap is now necessary and the Government must act urgently to ensure it is in place to protect customers next winter.
"The big six energy companies might whine and wail about the introduction of a price cap but they've been overcharging their customers on default [tariffs] and SVTs [standard variable tariffs] for years and their recent feeble efforts to move consumers off these tariffs has only served to highlight the need for this intervention."
The committee's report added: "We conclude that the big six have brought this policy intervention upon themselves by raising their prices in 2017 and by failing to take effective action against the overcharging of their customers on default and standard variable tariffs."
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Those on a default tariff with one of the big six pay an average £1,130/year based on typical use. Customers with the cheapest supplier on the market pay £807/year, a difference of £323/year, for the same amount of energy used.
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