Millions of people are set to see their energy bills curbed by an “absolute cap” as the Government introduced a new pricing Bill today.
Energy Secretary Greg Clark said draft legislation would end rip-off energy prices by capping standard variable tariffs (SVTs) and other default tariffs.
Around two-thirds of energy consumers in Great Britain are currently on this type of tariff – around 18 million customer accounts.
The new cap is set to be in place initially until the end of 2020 with a possible extension to 2023.
Business and Energy Secretary Greg Clark said they had a “duty to act” on energy bills.
However a handful of Tory MPs are set to rally against the plan, with calls for a relative cap rather than an absolute cap already underway.
John Penrose MP said: “An absolute cap would throttle competition, be out of date as soon as the wholesale price of gas goes up or down, and energy firms would spend more time lunching their regulators than delighting their customers.
“The challenger energy companies - the competition we’re trying to promote - want the cap to be relative and temporary, which should tell us we’re on the right track, and so do 213 MPs from all political parties.”
Labour’s shadow business secretary Rebecca Long Bailey said the cap had taken an “extraordinary” amount of time to come about and had taken “pressure” from all political parties.
She said it was unfortunate it would not help customers this winter and four million people in fuel poverty will face another winter of “cold homes or astronomical bills”.
The Government will ask the Commons’ Business, Energy and Industrial Strategy Select Committee to scrutinise the Draft Domestic Gas and Electricity (Tariff Cap) Bill.
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A review of the retail energy market last year, found customers of the Big Six suppliers were spending £1.4 billion a year on SVTs and other default tariffs.
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