UK energy cap could have been avoided, lobby group says | Money

Energy suppliers could have avoided the government imposing a price cap if they had acted faster to shift customers off the tariffs branded a “rip-off” by Theresa May, according to an industry lobby group.

Lawrence Slade, chief executive of Energy UK, also said he believed it was still possible the cap might not happen – if the sector can transform itself in time.

Asked if the cap could have been avoided in a year dominated by politicians threatening regulation to stop some consumers paying hundreds of pounds more than others, he said: “I don’t think it was inevitable. I suppose the industry could have moved a bit faster or been clearer about what it was willing to do.”

Slade said that recent commitments by firms including E.ON, ScottishPower and Centrica to get householders off default tariffs were positive and serious, but conceded they had come too late.

But the industry chief, who represents the big six and other suppliers, defended companies, saying it was difficult to be the first to act because the sector was such a “competitive arena”.

He also suggested it was still feasible the cap might not happen. “Anything is possible. And if competition carries on at the rate it’s going, and if the companies put through the changes they’ve committed to, the market could look a very different place in 12 months’ time,” he said.

Should a ceiling be imposed, as most industry-watchers expect, Slade said the growing number of people switching suppliers could suffer a setback. “It’s an obvious worry,” he said. About 5.5 million people will have switched by the end of the year, up by more than 2 million on 2014.

Slade rejected the idea that reduced switching would kill off the smaller players, which have taken a fifth of the market.

“I’d like to think we’ve reached a tipping point, a point where you just have sustained market change and you have companies that have to fight for their customers,” he said.

But he did argue, as npower, SSE and Centrica – owner of British Gas – have done, that exemptions for companies with less than 250,000 customers should come to an end. These smaller firms do not have to pay the costs of government schemes for vulnerable people, such as the warm home discount.

1930 - UK energy cap could have been avoided, lobby group says | Money

British Gas smart energy monitor: smart meters will be a priority in 2018. Photograph: Alamy Stock Photo

Slade said that as well as caps, smart meters would be a priority in 2018. More than 8m smart meters, which automate meter readings, have been installed so far, ahead of a government target of every home being offered one by the end of 2020.

But the project has come under fire because almost all the meters installed are first-generation models – known as SMETS1 – which can lose their smart functionality after households switch energy supplier.

“I worry it has tarnished the project,” Slade said. “One of our big problems as an industry is getting the customer engagement and getting the meters into people’s houses.”

On the changing nature of power generation, Slade said that renewables were “winning the argument”, but some myths persisted. He also said that electric cars were a “tremendous opportunity” for energy firms.

But he said efforts to limit the climate change impact of heating the UK’s buildings were lagging behind. “I’m really worried about heat. I honestly don’t believe we’re doing nearly enough to look at heat and contributions that need to be made towards decarbonisation.”

Various options have been mooted as an alternative to the gas that heats most homes, from hydrogen to electric heat pumps. But Slade said more investment was needed now to spur innovation and cut the costs of greener heating technologies.

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