An energy price cap will be in place this winter after legislation passed through Parliament but don’t wait – you can switch and save today.
The Domestic Gas and Electricity (Tariff Cap) Bill, which was passed last night, will require the energy regulator Ofgem to cap standard variable and default energy tariffs – which are usually £100s more expensive than the best deals.
The price of the cap hasn’t yet been confirmed but it’s still likely to be more expensive than the market’s cheapest tariff.
Since the start of the year, the average big six standard tariff has risen by 6.5% – or £74/year – for a typical dual-fuel household, from £1,132/year to £1,206/year, whereas the market’s cheapest fixed tariff is currently £850/year based on typical use.
The Government also announced that it will require the 15 biggest firms to improve energy efficiency in over one million low income and vulnerable households over the next three and a half years.
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How will the cap work?
The cap will be in place from the end of 2018 and the level it is set at will be reviewed at least every six months while it is in place.
It will continue until 2020 when Ofgem will recommend if the cap should remain on an annual basis up to 2023.
It will be absolute, meaning it won’t vary between suppliers, but it may differ between payment methods, fuel and meter types.
The cap is expected to help protect 11 million customers.
What does the Government say?
Prime Minister Theresa May said: “For far too long older people, hard-working families and those on low incomes have been subject to rip-off energy tariffs. Our energy price cap will protect households from unfair price rises in time for this winter when people can feel the pinch more acutely.
“We know that the cost of living is still a challenge for some families and today marks an important step in helping people to keep more money in their pockets.”