Energy Price Cap - Affordable and Simple Proposal

RobByass

Thursday 8 September 0630   (written prior to Government announcements)

ENERGY PRICE CAP FOR DOMESTIC & BUSINESS CONSUMERS

It is important that any scheme is Targeted, Viable, Time Limited and Simple to operate.

All of the schemes so far proposed fail on some or all of the above criteria.

 The consumer pays for KW used at the Capped price

 Cost / KW in excess of the capped price will show as a debt on invoices. This balance will be carried forward to future statements and to future suppliers if the consumer changes supplier.

 The Debt accrued will be transferred to Government on a quarterly basis. Government will repay the debt to the energy company and then issue a statement to the Consumer. Interest will be charged. This could be varied in the future depending on how the economy is looking and how soon the Government needs repayment. Interest rates could be adjusted to fine tune the rate of repayment. Consumers should pay the Interest on the Loan from the Government on a quarterly basis.  Capital repayments should be brought in after a year.

The scheme would be finite. The scheme should have an end date set at 2 years initially.  

 Within 3 months any Business on the scheme (not Domestic Consumers) would be required to submit a business viability plan. The indiscriminate Covid loans supported many zombie businesses that should have been allowed to fail. The debt will show in year-end accounts.

 Consumers which currently have contracts for energy which are below the price cap will be on the scheme but will show no debt unless they renew contracts at prices above the price cap.

 

The Price Cap will buy time.

 It will flatten the inflation curve and reduce peak inflation. This will reduce the wage price spiral and reduce costly strikes and industrial unrest.  

 It will give time to increase energy from renewables and to find alternative supplies of carbon-based energy, and to increase storage

 It will get us through the coming winter

 It will give consumers time to adapt to reduce energy consumption

 

Consumers on the lowest incomes or on benefits would have to be grant aided directly rather than given a loan they could never repay. Means testing would be applied.