File photo dated 18/10/13 of electricity pylons near Lydd, Kent. Energy regulator Ofgem has put forward plans to slash National Grid's budget by £185.4 million. PRESS ASSOCIATION Photo. Issue date: Thursday August 18, 2016. The watchdog, which sets the amount of money granted to National Grid to look after the UK's gas and electricity networks, said the proposals were part of a mid-period review. See PA story CITY Ofgem. Photo credit should read: Gareth Fuller/PA Wire

Energy cap not until next winter – Ofgem

Ofgem has said that the government’s energy cap will not come into force this winter.

An interim cap aimed at the most vulnerable customers could be implemented by February.

Ofgem said: “This will provide some short-term relief for vulnerable customers ahead of government plans for an energy price cap being realised”.

The chief executive of Ofgem, Dermot Nolan, highlighted the length of time needed to pass legislation, saying: “it could be five months [after royal assent]. Possibly it could be more, possibly it could be less.”

The government’s cap has been criticised by business groups. Responding to the speech, the Confederation of British Industry said:
“Affordable energy matters for everyone and particularly for the most vulnerable. However, today’s announcement is an example of state intervention that misses the mark. Market-wide price caps are not the best answer.”

The Institute of Directors was also critical: “You have a Conservative Party which talks about the importance of markets, but then tinkers around with […] energy price caps. What are business leaders meant to make of it all?”

John O’Connell, Chief Executive of the Taxpayers Alliance, said that the PM was focusing on the wrong target:

He said: “The Prime Minister is right that families are struggling to cope with the rise in energy bills and this is due to green taxes and subsidies. Instead of intervening in the market, the Government should stand up to the green lobby and slash unnecessary taxes and subsidies that artificially inflate the cost of energy for families.”

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