Consumer group and industry leaders are warning that Theresa May could drive energy prices for vulnerable consumers even higher if she places a price cap on ‘standard’ energy tariffs as part of the Conservative Manifesto ahead of the General Election on 8 June.

The Prime Minister pledged to introduce a cap for customers on the standard variable tariffs at the Conservative Party conference last October, ostensibly to help poorer voters.

Proactive consumers shop around on comparison sites for an advantageous energy deal, but two-thirds of consumers have not changed supplier in the last three years, according to research by both Citizens Advice Bureau (CAB) and the Competition and Markets Authority (CMA). These more passive consumers remain on standard tariffs with one of the ‘Big Six’ energy suppliers, including 80 per cent of Britain’s elderly, disabled and low income households. The research found that consumers pay over the odds by a staggering £1.4 billion a year.

CAB Director of Policy and Advocacy James Plunkett commented in a blog: “From the sound of briefings, the plan could be a full cap on the Standard Variable Tariff, the energy deal that two thirds of Britain’s households are on. That would be a bold option, cutting bills by somewhere in the region of £100 for as many as 18 million households. And, of course, vulnerable households are more likely to be on poor value energy deals, so the effects are unfair as well as wasteful.

“This means (energy companies) can pursue two different pricing strategies for each market: compete fiercely for active customers with attractive deals and, at the same time, push up prices, often significantly, for passive customers.”

Josh Hardie, Deputy Director-General of business organisation the CBI commented: “Putting customers at the heart of the energy market is important for everyone. A major market intervention, such as a price cap, could lead to unintended consequences, for example dampening consumers’ desire to find the best deal on the market and hitting investor confidence.

“The CMA’s thorough two-year investigation identified low levels of consumers switching energy providers as a challenge, and put forward a range of recommendations to address this," Hardie said. "It is important that these measures bed in before looking to further interventions."

Justin Bowden, National Secretary of GMB, the union for energy and gas workers, added: "Should this policy come into effect, and the regulator be given the job of capping energy prices, then Ofgem must distinguish between profiteering and the resources needed to generate jobs and to pay for the vital infrastructure needed to maintain our power networks.”