The case against the Energy Price Cap

Think tank: Centre for Policy Studies

Author(s): Dillon Smith

August 8, 2023

This report from UK think tank the Centre for Policy Studies looks at the history of the EPC including the crises and political and regulatory distortions.

This report examines the history of the Energy Price Cap (EPC) and the crises and political and regulatory distortions which have dragged it away from its original purpose. Far from its original goal of providing protection for customers who were unable to take advantage of market forces and switch between providers, either due to infirmity, disability, or less choice due to being on a prepayment meter, the EPC now covers a staggering 29 million households – almost the entire market – and has moved from a cap to a de facto regulated market price. The research shows that for almost two years almost all tariffs have been priced at or just below the price-capped level, with no evidence this will change in the near future – meaning the government is effectively setting the market price for energy, eliminating any chance of customers switching to a better deal. The report urges the government to move from a wartime to a peacetime regulatory regime and sets out the key principles of a new system.