Author Lauren Howells
After promising to put a price cap on energy bills, in what was described as the , the Government has designed to place a temporary cap on energy prices.
The draft bill includes measures that would limit the cost of standard variable tariffs, as well as various other default tariffs that customers are moved onto at the end of their fixed-term deal.
The government says that around two-thirds of energy customers in Great Britain are currently on this type of tariff, accounting for around 18 million customer accounts. However, 4 million of these customers are already .
Cap on energy prices may not take effect until start of 2019
According to the , analysts think that the cap may not take effect until, at the very earliest, the beginning of 2019, due to the legislative process.
The government has said that, under the proposed legislation, the cap would be a temporary measure and would run until 2020. However, Ofgem, the independent regulator, could recommend to extend it on an annual basis, until 2023, at which point it would expire.
Cap on energy prices could save people up to £100 a year
The Conservatives have that this cap could save people up to £100 a year.
Theresa May said:
“I have been clear that our broken energy market has to change – it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much. Today’s publication of draft legislation is a vital step towards fixing that, and in offering crucial peace of mind for ordinary working families all over the country.”
Ofgem announced it was extending its prepayment safeguard tariff this winter
Earlier this week, that it was extending its prepayment safeguard tariff to around 1 million more vulnerable households this winter, saving them on average £120 a year.
The government has said that this would mean a total of 5 million people will be protected by price caps this winter. The regulator says that it is working on extending price protection to at least another 2 million vulnerable households for next winter “once the timing of the Government’s price cap is confirmed”.
Dermot Nolan, chief executive of Ofgem, said: “The Government’s proposed bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.
“In the meantime, we expect suppliers to do more to get customers on poor value default tariffs onto better deals.”
Regulator proposing automatic compensation for consumers if switch goes wrong
Ofgem also announced that it is proposing automatic compensation for consumers if their switch goes wrong.
Speaking about the draft price cap bill, Business and Energy Secretary Greg Clark said:
“People who show loyalty to well-known brands are paying hundreds of pounds a year too much on standard variable tariffs and I am determined that this practice should end.”