By Sabina Zawadzki
LONDON (Reuters) - Britain's regulator on Thursday proposed a price cap on default energy bills to save households about a billion pounds a year and aims to implement it in time for winter following a government promise to tackle "rip-off" prices.
The energy regulator, Ofgem, said it wanted to cap the default electricity and gas bill set by the country's big six suppliers at 1,136 pounds a year, a level at the lower end of expectations and below the average paid now.
It said it would set the cap in November, to be introduced by the end of the year and update it in February 2019, to take effect in April. It will then be reviewed every six months until the end of 2020, when it can be extended until 2023.
"The cap would save consumers who use a typical amount of gas and electricity around 75 pounds per year on average ... A typical consumer on the most expensive tariffs would save over 120 pounds," Ofgem said in a statement.
"In total, the price cap would save consumers around 1 billion pounds."
The price cap applies to the so-called standard variable tariff (SVT), the most popular type of rate offered by the big six energy suppliers, as well as other default deals. Customers on SVT pay on average 1,185 pounds a year.
The suppliers, controlling 80 percent of the market, are Centrica's <CNA.L> British Gas, SSE <SSE.L>, E.ON <EONGn.DE>, EDF Energy <EDF.PA>, Innogy's <IGY.DE> Npower and Iberdrola's <IBE.MC> Scottish Power.
They have tried to cut the number of customers on that tariff but at the same time raised prices despite a government pledge to limit costs for consumers.
Ofgem's cap is in the lower range of analysts' expectations, who pegged it at between 1,120 and 1,200 pounds. The regulator said 11 million customers would be protected by the cap.
Home power bills have soared in Britain over the past decade despite liberalisation of the market and an expansion of the number of suppliers.
An influential committee of lawmakers called Britain's energy market "broken", while Prime Minister Theresa May said the energy tariffs were a "rip-off". Suppliers, however, blame rising wholesale prices and policy costs for the retail price increases.
(Additional reporting by Susanna Twidale; Editing by Dale Hudson and David Evans)