What the energy price cap means for you
Energy regulator, Ofgem have introduced a new energy price cap on default tariffs that is estimated to save around 11 million people an average of £76 a year. As this price cap is only on default tariffs, consumer groups say households can still get a better deal by shopping around. Fixed price tariffs tend to be much cheaper than default tariff prices, so it’s important to stay on top of your energy contract renewals.
"The introduction of this cap will put an end to suppliers exploiting loyal customers. However, while people on default tariffs should now be paying a fairer price for their energy, they will still be better off if they shop around," said Gillian Guy, chief executive of Citizens Advice.
The price cap means that the average customer with gas and electricity on default tariffs, paying by Direct Debit, will pay no more than £1,137 a year. So, in a nutshell, the energy price cap means fairer prices for your home electricity and gas bills.
How the price cap works
No longer will default tariffs, such as standard variable tariffs, be extortionately high. The price cap isn’t on the total bill, it applies to the cost per unit of energy and the standing charge. The price cap for default tariffs means the cost of electricity is capped at 17p per kWh and the cost of gas is capped at 4p per kWh.
The price cap will be updated by Ofgem in April and October every year, to ensure the latest estimated costs of supplying gas and electricity are reflected.
Those on a prepayment meter won’t be affected as there is already a price cap in place.
Do I have to apply for the price cap?
No - if you’re eligible, you won’t need to do anything. The price cap will be applied to all default energy tariffs.
How do I ensure I’m always on the best price?
Although the energy price cap means default tariffs will be fairer priced, this doesn’t mean you should stop searching for the best price. The way to ensure you’re never paying more than you should is to switch, switch, switch.
An easy way to search for the best price is by comparing prices online as soon as your contract is up for renewal. To secure the best price, compare with UK Power now.