Tinkering with the energy price cap cannot fix it, says IEA analyst
16 May 2022
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Len Shackleton writes for The New Statesman
16 May 2022
Economic Theory
11 November 2024
Commenting on the news Ofgem has proposed to update the energy price cap quarterly rather than every six months, Andy Mayer, Energy Analyst at free market think tank the Institute of Economic Affairs, said:
“Tinkering with the energy price cap cannot fix it. This disastrous policy has put 29 energy companies out of business, while doing nothing serious to address affordability.
“The cap slows down price rises, but means they remain higher for longer, given the multi-billion-pound cost of bankruptcies and the delay repay scheme.
“Moving from three to six-month adjustments is marginally more flexible but increases administration costs and is far less flexible than simply letting the market work to set prices.
“The government could scrap the price cap and deal with the consequences of high prices more effectively through welfare, rather than endlessly tinkering with a failed system.”
ENDS
Notes to editorsContact: Emily Carver, Head of Media, 07715 942 731IEA spokespeople are available for interview and further comment
“Tinkering with the energy price cap cannot fix it. This disastrous policy has put 29 energy companies out of business, while doing nothing serious to address affordability.
“The cap slows down price rises, but means they remain higher for longer, given the multi-billion-pound cost of bankruptcies and the delay repay scheme.
“Moving from three to six-month adjustments is marginally more flexible but increases administration costs and is far less flexible than simply letting the market work to set prices.
“The government could scrap the price cap and deal with the consequences of high prices more effectively through welfare, rather than endlessly tinkering with a failed system.”
ENDS
Notes to editorsContact: Emily Carver, Head of Media, 07715 942 731IEA spokespeople are available for interview and further comment
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