UK government to take ‘muscular’ action on energy bills

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Greg Clark, the UK business secretary, has promised “muscular” action on household energy bills “very shortly” but failed to clarify whether the government would act against the utility companies before the general election on June 8.

Energy companies have been braced for further government intervention on household bills following a series of price rises since the start of the year, which have been condemned by consumer groups and MPs from across the political spectrum.

Mr Clark promised the government would take “decisive” and “strong” action “very shortly” to protect households on the most expensive energy tariffs, when it issues a long-awaited response to a competition inquiry into the retail energy market, which was published last year.

However, when questioned by MPs on Wednesday, Mr Clark said the government would have to reflect on whether that response can be “finalised in time” to be published before the snap general election.

Iain Wright MP, chairman of the Parliamentary business, energy and industrial strategy committee, accused the government of harming consumers by delaying action on energy bills.

His comments were spurred by theories that a price rise announced by French utility EDF last week – its second such announcement in four months – was motivated by an expected clampdown on the sector.

The energy sector is braced for a possible price cap for customers on so-called standard variable tariffs, which are the most common rate but tend to be more expensive than fixed-price deals.

Mr Clark said he was disappointed that energy companies had not exercised the “responsibility” he thinks they ought to show in protecting households on the highest tariffs.

“The government intends to act on what is a flagrant mistreatment of customers,” he said.

Analysts at Jefferies interpreted Mr Clark’s comments as signalling there is a “high chance” the government could act on energy prices in the “coming days”. They wrote in a note:

Mr Clark stated that he is currently reviewing whether it [the government's response to last year's competition inquiry] can be released shortly, ahead of the election. Given that the government goes into Purdah next Thursday, any announcement would need to be made in the coming days.

Mr Clark also appeared to suggest the UK may consider a delay in leaving Euratom, the pan-European atomic energy regulator, to ensure continuity in Britain’s nuclear industry.

The government said in January that it would leave Euratom as part of the Brexit process, despite some legal opinions that Britain could maintain membership even once it quits the EU.

Mr Clark said those legal opinions were a “highly contested view” and suggested the government had to signal its intention to leave Euratom to ensure other parts of the the Article 50 “divorce clause” were not defective.

But Mr Clark stressed the UK government would seek “continuity” of arrangements for the nuclear industry.

“The triggering of Article 50 on Euratom is not because we have a fundamental critique of the way it works,” he said.

When asked whether it was possible Britain could leave the EU but delay leaving Euratom, given the complexity of negotiating replacement arrangements, Mr Clark said “all of the options and contingencies we will have to explore from a position of wanting to seek as much continuity as we can on this”.

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