Energy price cap keeping bills artificially high, think tank warns

The think tank, which was founded by Margaret Thatcher, said the three month delay in reviewing the cap also meant falls in wholesale energy prices were taking longer to filter through to households than in other countries. 

The CPS said this was partly why Britain’s inflation crisis was worse than in other economies. Inflation remained at 7.9pc in June, compared to 5.5pc in the eurozone and 4.1pc in the US.

Dillon Smith of the CPS said: “Contrary to its original intent, the energy crisis has transformed the Energy Price Cap from a genuine cap to a state price control for virtually the entire market.

“Utility firms are being actively discouraged from offering new, more affordable deals to customers because of state interventions in the energy market.

“Competition has all but disappeared, meaning prices are being kept high, further contributing to measured inflation.”

Nearly all tariffs have been priced either at or just below the cap for the past two years, the CPS found, and switching rates have plunged from 496,000 per month in 2019 to just 85,000 per month in 2022.

Competition in the energy market had “essentially frozen”, the CPS said.

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