Ministers tell Big Six energy companies to sort out charges or face price cap in bid to fix UK’s broken energy market

FURIOUS Ministers are ready to take the ‘nuclear option’ of introducing a regulated standard energy price to end the Big Six rip-off.

The Sun can reveal officials are studying a proposal to effectively cap the most common tariff for two years in a desperate bid to fix Britain’s broken market.

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It comes after Scottish Power followed Npower and announced an inflation busting 8 per cent price rise for dual-fuel gas and electricity customers.

British Gas separately said it was freezing its prices – until August.

Under plans being considered for a Government policy paper in the coming weeks a new ‘fair price’ – or default standard variable tariff - would be set by industry regulator Ofgem.

Sources claim companies would then be expected to use this for at least the estimated 10 million customers who haven’t switched for at least three years.

The proposal was tabled by Martin Cave, an executive at the Competition and Markets Authority.

The economist formally objected to the outcome of the CMA’s investigation the energy market last year – claiming proposed remedies did not go far enough.

At the time the CMA merely suggested a price cap for customers on pre-payment meters – which is now coming into force.

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Mr Cave said this should be extended onto the standard variable rate for two years until smart meters are common place across the UK – making it much easier for Brits to switch supplier.

Big Six standard variable rates can be as much as £300 more expensive than the cheapest deals on the market.

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A Whitehall source told the Sun last night: “Ministers are poised to do something quite radical. They have given the industry a chance to change their behaviour – and they haven’t taken it.

“The idea would be that the default tariff was high enough to allow suppliers to compete below, but protect the most vulnerable who have never switched.”

Business Secretary Greg Clark last October blasted the Big Six and said the Government had a “duty to act” over the estimated £2 billion milked from customers each year.

The Cabinet Minister said he was dismayed that customers who have stuck by their supplier for years and failed to switch are the very ones end who end up paying the highest prices.

Gas and electricity prices are set by the utilities regulator in Northern Ireland, based on having full transparency of suppliers’ costs.

The regulated prices effectively set a cap which rivals undercut to win customers.

Richard Lloyd, the former head of consumer champion Which? last night said: “The world’s moved on since the energy inquiry. There’s a big squeeze in living standards coming that will be made worse by energy prices spiralling up yet again.

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“It goes against the grain for a Conservative Government, but they have run out of options if they want to protect those that are just about managing.”

Ofgem last month said it saw no justification for price hikes. Scottish Power yesterday said it had no alternative but to up prices for 1.1 million customers given “months of cost increases.” Npower last week incensed the Prime

Minister give announcing a 9.8 per cent or £109 rise in its annual dual –fuel bills.

British Gas yesterday said it was extending its price freeze for five million. Bosses insisted they had not come under political pressure after reports earlier this week it was preparing a 9 per cent increase of its own.