The original point of the consumer energy price cap when it was introduced by the previous Conservative government was to protect vulnerable energy customers from predatory variable price tariffs which punished people who didn’t switch when their fixed rate tariff term was up.

Capping standard variable tariffs was a way of preventing large profits being extracted from the most vulnerable energy customers.

Now, with wholesale prices surging, Ofgem is using the price cap to force energy suppliers to sell gas and electricity to consumers below the market wholesale cost.

Thirteen energy firms have gone bankrupt since January 2021 and several more are facing financial ruin.

If you accept the price cap as it was set on 1st October 2021 then you basically accept that only the biggest, most cash rich (or most able to borrow money) suppliers will survive the winter.

What you’ll be left with, on April 1st next year is a debt ridden energy market, far smaller, less innovative, less efficient, less competitive market dominated by a few large companies who will be in no mood to reduce their prices for years.

They will have debts taken out on behalf of the UK government to pay for subsidised energy, they will have interest to pay on these loans (at a time when interest rates are likely to rise).

The ironic result of the price cap will be higher prices than if it weren’t there in the first place. UK households and businesses will have to pay for this absurd policy for years to come.

It’s better to pay for energy at their current high prices in the short term than to put off price rises for a few months only to have a long term high cost, low investment and low efficiency energy market for years.


Arbutus Close, Dorchester