An energy price cap will be in place this winter after legislation passed through Parliament but you don’t have to wait to save money!
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 possible that it will 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.
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.