Our evidence to the BEIS select committee on the gas and electricity price cap

Written evidence from Taxpayers Alliance (PLS0009)

 

Executive Summary (Click here to read the full evidence)

 Energy bills represent a significant proportion of household expenditure and many households, especially those on modest incomes, find it difficult to pay.

 In response to this, the government has announced that it will introduce a price cap.

 Although well intended, such a policy is misguided. A cap on energy bills will not help consumers and is likely to exacerbate the problem.

 Intervention in the energy market in the form of a cap on bills will lead to decreased competition and less investment which will be damaging for companies and will place upward pressure on prices.

 The reason why energy bills are so expensive for consumers in the UK is due to the various schemes that force energy companies to include minimum shares of energy from renewable sources in their portfolios. Those schemes represent a subsidy to the renewable energy sector which is paid through energy bills. Together with related green measures, they represent a significant proportion of the retail gas price and retail electricity price.

 The draft legislation fails to address this and so will not help consumers.

 If the government is serious about lowering energy bills for consumers then it should scrap the various schemes that force energy companies to include minimum shares of energy from renewable sources in their portfolios.

 The government should also abolish a number of regulations which make entry to the market difficult. This would lead to more companies entering the market, thus increasing competition and lowering prices for consumers.