From the Financial Times
(I’d post the article but they keep warning me about copyright)
To summarise the article and add in a little:
RBC (I’m assuming that’s the Royal Bank of Canada, article doesn’t specify) estimates the proposed energy cap will wipe about 25% off of energy company earnings. A company like Centrica, which is the UKs largest, while taking a hit, will more than likely ride out the 25% hit. How the smaller energy companies will react is unknown however. It’s quite likely that many won’t be able to sustain the 25% loss, and will go out of business. So the big companies, like Centrica, will absorb the customers of those which drop out of the market - monopolising it.
And, with the cap, you’d be severely restricting the incentive for a new company to join the market to increase competition.
So let’s all hope that the cap isn’t implemented.