Why Cameron’s energy promise has a whiff of desperation

At PMQs the prime minister said: “I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers.”

Really? How? Not my questions but the questions of Whitehall folk who should know something about it.

It has a whiff of a panic announcement in response to Ed Miliband‘s promise at Labour conference that he wanted to see every pensioner over the age of 75 pay the lowest energy tariff available by law.

But the mechanisms for achieving this are a little vague – even vaguer if you imagine rolling out a compulsory arrangement for the whole country.

How do you decide what is the best tariff for someone, and bring the weight of the law to bear on a company to provide that tariff? Hardly anyone has a smart meter. How can a company know what is best for you, your off-peak usage, your energy usage in a cold spell?

Competition could easily be stifled if all suppliers felt under legal pressure to provide a minimum tariff. Oh, and for good measure it’s probably illegal under EU law.

It’s possible that you could compel companies to provide all relevant information about tariffs, as Nick Clegg has already promised, but that is very much not what the prime minister said.

I hear DECC was asked at the weekend if this announcement was a good idea and said absolutely not. From what I can gather, energy companies were not consulted.

This has a whiff of a rather desperate announcement to show the government is “on the side” of struggling households.

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