Conservative price cap plans cause drop in energy group shares

Shares in UK utilities dropped at the start of trading on Monday, after the Conservative party promised to make intervention in gas and electricity markets a key part of its manifesto for the upcoming election.

Centrica, the owner of British Gas, was the worst performer on the FTSE 100, falling as much as 3 per cent on a strong day for the wider market.

Analysts at Bernstein have calculated that Centrica’s operating profits could take a £332m hit in the first year of a price freeze. Shares in SSE also fell 1.1 per cent.

Damian Green, work and pensions secretary, told the ITV Peston on Sunday programme yesterday that “some people feel the energy companies have taken advantage of them”, confirming that price caps would be in the Conservative manifesto.

However, the plans have been criticised by industry figures including Iain Conn, Centrica’s chief executive. ScottishPower, another of the “big six” utilities which is owned by Spain’s Iberdrola, said this morning that a cap will lead to “less competition” for customers.