Consumers may find that many of the cheapest fixed rate deals in the market will disappear. Already the difference between cheap deals and standard tariffs has moved closer together and suppliers will be wary of taking a risk by offering bold new propositions. The squeeze on companies could have devastating consequences for smaller suppliers in the market which are more vulnerable to going under if wholesale market prices spike. This could mean fewer options for consumers if independent suppliers exit the market or choose not to enter it in the first place.

What does this mean for the big energy companies?

The price cap threat has already wiped billions from the UK’s listed energy suppliers. Earnings at the largest companies, such as British Gas and SSE, could fall as much as 25pc or hundreds of millions of pounds. The hit is predicted to reach full force by 2018 at which time companies may need to rethink dividends in order to protect credit ratings. In order to defend shareholder payouts companies are expected to scaling back on investments and slash jobs in a bid to cut costs.