The Conservatives have said they plan to cap “rip-off” energy prices but not necessarily through legislation.
The Queen’s Speech did not introduce a bill to implement the cap but said ministers were “considering the best way” to protect customers on the poorest value tariffs.
A source said they were talking to the regulator Ofgem as how best to control prices, with the possibility of legislation being held in reserve if they could not reach their aims through other means.
“Our intention is to protect those people who we set out on standard variable tariffs from rip-off energy price rises,” the source said.
“That is what we are talking about, that is what we want to do, and that is why we are holding legislation in reserve.”
The Tories, during the campaign, said 17 million families on poor-value standard variable tariffs stood to save up to £100 a year as a result of the cap.
In the Commons, Theresa May said the Government planned to “take action” on the matter but did not give additional details.
“We recognize the problem that there is about energy bills,” she told MPs in the Queen’s Speech debate.
“We want to ensure that we get the best measure in place that is going to deliver what we all want, which is to see people no longer being ripped off by the high energy tariffs that they are given.”
In a message sent to Ofgem chief executive Dermot Nolan, Energy Secretary Greg Clark said: I am sure that you share my concern that the detriment to retail energy customers on poor value standard variable tariffs, which was identified by the Competition and Markets Authority as averaging £1.4 billion a year, must be brought to a rapid end. You will have seen that the Conservative manifesto proposed to ‘extend the price protection currently in place for some vulnerable customers to more customers on the poorest value tariffs.’
“Other parties proposed, in their manifestos, price protection for consumers disadvantaged by these tariffs.”
“I consider that the endorsement of this approach by an overwhelming majority of the electorate constitutes good reason to proceed without delay.”
He additionally said that Ofgem “has powers available that would allow it to address the problems in the market that we now see” and asked the regulator to advise him on what action it intended to take on safeguarding customers on the poorest value tariffs, ensuring that micro businesses are fairly treated and considering the future of standard variable tariffs.
“I would be surprised and disappointed if the major energy companies did not acknowledge the need for such changes and be supportive of them, and for them to be made quickly, so there is common treatment across the industry.”
In response, Ofgem said: “We share the Government’s concern that the energy market needs to work better for all consumers and that energy companies need to do more to help loyal consumers get a better deal.
“We have received the Secretary of State’s letter.
“We will shortly be setting out the work we have under way and further options we can explore in the light of the Government’s plans.”