Shares in Centrica and SSE tumble after the Conservatives promise to cap energy prices

 
Courtney Goldsmith
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Centrica's shares have taken the biggest hit (Source: Getty)

Energy shares slid this morning after the Conservative party said it will offer voters a new cap on energy prices in its election manifesto.

Shares in Centrica, which owns British Gas, tumbled 5.15 per cent at 197p while SSE's stock fell 3.67 per cent at 1,392p in morning trading.

Yesterday, Tory MPs were briefed to expect an intervention into the energy market following business secretary Greg Clark's promise to take "muscular" action just days earlier.

The plans for a new price cap are already under fire from energy bosses and consumer groups who say it will cause even less competition.

Keith Anderson, chief corporate officer of Scottish Power, told the BBC a price cap will hurt customers in the long run by lowering competition in the sector, and the boss of Centrica, Iain Conn, yesterday said price regulation is not in consumers' best interests.

"Price regulation will result in reduced competition and choice, stifle innovation and potentially impact customer service," Conn said.

Analysts at Jefferies said Centrica is most at risk from the proposed price cap as it is the dominant UK supplier.

"Depending upon the policy fine print and resulting financial impact, Centrica may have to reassess its current strategy and potentially its dividend policy," Jefferies said.

Defence secretary Michael Fallon today said the current energy market is not working properly.

"There's not been enough ability for people to switch; we haven't seen the competition we were hoping to emerge amongst the energy companies," Fallon told the BBC.

"Therefore it's right to look at the way they are regulated and it's right where we can to protect people against large and arbitrary increases in their bills."

Read more: Government to look more closely at the UK's energy market

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