Energy and Environment

Energy price cap will not guarantee lower bills


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Reaction to Conservative Party pledge to introduce cap on household energy bills

Commenting on the Conservative Party’s pledge to introduce a price cap on household energy if they win the general election, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“This type of cap is a crude intervention which will not guarantee lower bills for consumers. The move may well end up backfiring with energy companies likely to raise prices before the cap is introduced. Poorly justified political meddling will also deter new entrants, undermine competition, reduce much needed investment in the industry, and potentially put jobs at risk.

“Across Europe, price controls have failed wherever they have been introduced. There is no reason to think politicians know any better this time around. In reality a cap will do more harm than good for consumers and businesses alike.”

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Relevant IEA publications

In 2017 the IEA released a briefing on energy policy, ‘A post-Brexit framework for electricity markets’ which argues that Brexit provides a real opportunity to bring down electricity bills for low-income households. The full report can be downloaded here.

In 2015 the IEA released a report on energy policy, ‘Power Cut? How the EU is Pulling the Plug on Electricity Markets’. The full report can be downloaded here.

In 2013 the Institute of Economic Affairs published ‘From Nationalisation to State Control – The return of centralised energy planning’, which calls for government to step back from energy markets to lower prices. To download this report please click here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.

The IEA is a registered educational charity and independent of all political parties.