The Conservative party is expected to dilute the threat to energy suppliers with watered down plans to cap bills ahead of a fresh review into the rising cost of Britain’s electricity.
The Tory party said its ambition is for Britain’s energy costs to be the lowest in Europe, and its manifesto included plans to reignite the shale industry by offering a bigger slice of a sovereign wealth fund to those who welcome local drilling.
“We want to make sure that the cost of energy in Britain is internationally competitive, both for businesses and households,” said the party.
The pledge made no mention of the £100 savings for 17 million customers promised by Theresa May earlier this month.
A new addition to the Tory party manifesto is the pledge to tackle concerns over rising energy bills by putting in place a safeguard tariff cap for an unspecified number of consumers who are on the poorest value tariffs. The cap will also include bills paid by micro businesses.
“The manifesto wording was vague, as expected, but hints that the impact for the industry may be much less than we feared,” said Deepa Venkateswaran, an analyst at Alliance Bernstein.
Mrs May had promised a hardline, market-wide cap on all standard household energy tariffs but the party line appears to have softened the stance following fierce criticism that the move would stifle competition. The party has promised to maintain the competitive element of the retail energy market by supporting initiatives to make the switching process easier and more reliable.
“Alongside giving individuals greater control over their energy bills and protecting customers from unfair bills, we will help them to save energy,” the party added. Its energy efficiency drive would include a commitment to upgrading all fuel poor homes by 2030 and revising requirements for new homes too.
“An energy efficient home is a more affordable and healthy home,” the party said.
It came as a relief to the beleaguered energy industry which has lost hundreds of millions of pounds in market value since the price cap plans emerged. SSE shares rose 2.3pc to around £15 and Centrica climbed 4pc to £2.
Ms Venkateswaran said the manifesto suggests that the cap is not intended to save money on current bills but to prevent future unfair price hikes. On this basis the starting point for the Government cap would be the highest standard tariff in the market, rather than the average, and would sit just above current ‘reasonable prices’.
A Conservative spokesman said: “There has been absolutely no watering down of our plans to cap energy prices and to suggest otherwise is simply wrong.”
Meanwhile the long-held Tory support for shale gas is set to continue. The party dusted off plans first put forward by former Chancellor George Osborne in 2014 for a sovereign wealth fund. Under the latest plan it will pay shale revenue directly to individuals as well as for the benefit of the country at large.