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Tinkering with the energy price cap cannot fix it, says IEA analyst

Andy Mayer, Energy Analyst at free market think tank the Institute of Economic Affairs commented on the news Ofgem has proposed to update the energy price cap quarterly rather than every six months.

“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.”

Notes to editors

Contact: Emily Carver, Head of Media, 07715 942 731

IEA spokespeople are available for interview and further comment

Ofgem backs consumers with price cap update

Original article link: https://iea.org.uk/media/tinkering-with-the-energy-price-cap-cannot-fix-it-says-iea-analyst/

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