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UPDATE 2-UK ask regulator to set price cap to mend "broken energy market"

UPDATE 2-UK ask regulator to set price cap to mend "broken energy market"
From Reuters - October 12, 2017

LONDON (Reuters) - The British government put some flesh on its plans to cap consumer gas and electricity prices for millions of households, ordering the industry regulator on Thursday to come up with curbs that will initially last until 2020.

Prime Minister Theresa May first proposed a price cap on the energy sector earlier this year, the biggest market intervention since its privatization almost 30 years ago. She said her center-right government was trying to fix a market that punishes customers for their loyalty to a supplier.

Her announcement last week that the plan would go ahead initially wiped more than 900 million pounds ($1.2 billion) off the value of the two British listed companies Centrica and SSE alone.

I have been clear that our broken energy market has to changeit has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much, May said on Thursday.

The draft bill published on Thursday said the price cap would initially last until 2020, with the potential to be extended by up to three years if needed.

But, it gave no precise detail for businesses keen to see how much it would cost them, other than to say it would be an absolute price cap, as opposed to a relative one based on the difference between the cheapest and most expensive tariff. Ofgem will set the terms.

Britains energy market is dominated by the so-called big six providers -- Centricas British Gas, SSE, Iberdrolas Scottish Power, Innogys npower, E.ON and EDF Energy, which account for about 85 percent of the retail electricity market.

Shares in SSE added 1.5 percent by 1215 GMT on Thursday, while Centrica was up by 0.4 percent.

RISING COSTS

Energy bills have doubled in Britain over the past decade to an average of about 1,200 pounds ($1,500) a year, putting the biggest providers in the sights of politicians.

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