Energy Price Cap Concerns

via The Global Warming Policy Forum (GWPF)
http://www.thegwpf.com

Sir, The government reportedly intends to impose a price control that would cut £100 off the energy bills of 17 million customers (News, Apr 25). This is despite the Competition and Market Authority’s recent investigation which concluded that such a price control, even if temporary, “would run excessive risks of undermining the competitive process” and was likely to result in “worse outcomes for customers in the long run”.

As part of its investigation the authority calculated, in an unconventional way, that customers were paying more than necessary: it explained that high prices were likely to be “due to inefficiency rather than excess profits” and that a price cap “would create substantial losses for the sector as a whole”.

Surely it is not UK policy to impose measures that would hold prices below cost and inflict substantial losses on companies? A few failed economies have resorted to this. But such measures do not characterise successful market economies nor do they reflect well on UK regulation and competition policy.

Lord Lawson of Blaby, former secretary of state for energy

Stephen Littlechild, emeritus professor, University of Birmingham, and former director general of electricity supply

Sir Callum McCarthy, former chairman Ofgem

David Parker, emeritus professor of privatisation and regulation, Cranfield School of Management

Willy Rickett, former director general (energy), Department of Energy and Climate Change

Clare Spottiswoode former director general of gas supply

Peter Bucks, former non-executive director at Ofwat and senior financial adviser, Ofgem

Xeni Dassiou, reader in economics, City, University of London

Monica Giulietti, professor of microeconomics, Loughborough University

David Henderson, former head of economics & statistics dept, OECD

Tooraj Jamasb, Professor of Energy Economics, Durham University

Eileen Marshall, former managing director, Ofgem