LONDON: British Prime Minister Theresa May pledged on Tuesday to cap household energy prices if she is re-elected on June 8, sending share prices tumbling with the biggest market intervention since the sector was privatised almost 30 years ago.
Energy bills have doubled in Britain over the past decade to about £1,200 ($1,500) a year, putting the biggest providers in the line of sight of politicians and voters who are already battling rising inflation and limited wage growth.
May has previously praised free markets but has also said she would intervene in industries deemed to be dysfunctional. She said on Tuesday a move to cap energy standard variable tariffs would help about 17 million families.
“Like millions of working families, I am fed up with rip-off energy prices,” she wrote in the Sun newspaper, the country’s biggest selling title. “I expect (this) to save families on poor value tariffs as much as £100.”
Analysts at RBC Capital Markets said the main reason for Tuesday’s share price reaction was that May said the cap would apply to all standard tariffs, rather than just those customers deemed as vulnerable, as previously expected.
Britain’s competition body in 2016 ordered suppliers to cap prices for customers on prepayment meters but the latest plan by May’s Conservative Party would mark the first time since privatisation of the industry in 1990 that a government intervenes to cap prices across the market.
The industry has argued that a price cap would wipe out competition and damage investment. Centrica Chief Executive Iain Conn said last month the plan suggested some in May’s government did not believe in free markets.
“We believe that price regulation will result in reduced competition and choice, stifle innovation and potentially impact customer service,” Conn said on Monday.
The Confederation of British Industry, which represents the country’s biggest companies, also voiced concern. — Reuters
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