Theresa May’s plan to cap gas and electricity bills could put billions of investment in the UK at risk by creating huge uncertainty over government intentions, according to the body representing the big six energy suppliers.
In one of the strongest warnings yet about the impact of the cap on standard variable tariffs pledged by the Conservatives, Energy UK protested against “ill-considered” political intervention.
“Further price regulation at this moment would create huge uncertainty around future government intentions, potentially putting at risk the billions in investment and jobs needed to renew our energy system,” the group said in its statement for the election published on Friday.
Lawrence Slade, Energy UK’s chief executive, said: “What the industry overall needs is a period of certainty so we know what the policy objectives are, what the targets are, the framework is – so we can work together with the investment community to deliver the low-carbon economy that we need.”
Controlling prices would hurt competition and innovation, the group added. Ministers should instead “respect” an 18-month review of the energy market by the competition watchdog, which decided against a cap in favour of measures to encourage greater switching, Energy UK urged.
The industry body represents British Gas, EDF, E.ON, Npower, SSE, ScottishPower and dozens of smaller suppliers.
Slade said: “Ill-considered or poorly constructed regulation risks removing the competitive impetus that has driven the huge benefits seen in the market we have today, including an increasing number of suppliers offering a range of innovative products.”
He urged ministers to reconsider the “potential unintended consequences” before intervening in the market.
An influential government energy adviser said that the big six’s “howls of outrage” had gone too far but argued that a price cap was not the right solution.
“I really fear for some knee-jerk price cap,” Dieter Helm, an Oxford University economist, told an audience in London on Thursday. He said he favoured a more transparent energy tariff that was fairer for consumers but unregulated.
Energy UK said that whoever won in the general election on 8 June should also take a new tack on solving fuel poverty, which affected 2.3m households.
Help for those who were fuel poor – defined as people whose income would be below the official poverty line after paying for electricity and gas – should be funded through general taxation rather than paid through energy bills, the body said.
“The regressive nature of how the government has used the electricity bill to fund these programmes also needs to be reviewed, ending the system whereby the fuel poor pay to fund programmes to help the fuel poor,” said Slade.
The industry called for continued commitment to decarbonise Britain’s energy supply and said it would seek clarity on the post-EU position on carbon pricing. The next cabinet should also launch a review of the capture and storage of carbon emissions for industry and commercial sectors, it said.
MPs on Friday warned that the government’s cancellation of a £1bn carbon capture and storage (CCS) competition 18 months ago had left a big gap in UK plans to cut emissions. “The cancellation of the competition means there is now a significant gap in the [business] department’s plans for achieving decarbonisation while ensuring energy security. Without CCS there is no viable way to achieve emissions reductions in the industrial sector in the near future,” said MPs on the public accounts committee.
