New legislation which will mean an “absolute cap” can be set on poor value tariffs, will be introduced to Parliament today.
Government says cap will protect the 11 million households
The will enable independent regulator Ofgem to cap energy tariffs until 2020, which the government has said will protect the 11 million households in England, Wales and Scotland who are currently on a standard variable or other default energy tariff and are not protected by price caps that have already been put in place.
Some consumers currently paying up to £300 more than they need to
Consumers on default energy tariffs can pay much more than those who have shopped around to find a better value, fixed-price deal.
According to the government, some consumers are paying up to £300 more than they need to.
Prime Minister Theresa May said:
“It’s often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways”.
Cap in place until 2020
The government has said that the cap will be in place until 2020 but could be extended on an annual basis until 2023, depending on Ofgem’s recommendations.
Business and Energy Secretary Greg Clark said:
“Energy prices for millions of households on default tariffs are still too high. Our new price cap will guarantee that consumers are protected from poor value tariffs and further bring down the £1.4 billion a year consumers have been overpaying”.
This cap is separate to Ofgem’s safeguard tariff cap, which was introduced in 2017 and extended earlier this month to include another one million vulnerable people who receive the Warm Home Discount. Around five million households are currently protected by this cap.
Energy and Clean Growth Minister Claire Perry said:
“We are working hard to deliver an energy supply that is clean, affordable and innovative and an energy market that delivers the best possible value and service for energy customers. This new legislation is a big step forward toward that goal”.
Martin Lewis encourages consumers to check they are on the best deal now
The that the move is “an admission that encouraging consumers to regularly switch providers to pay less has not been as successful as hoped”.
told consumers to “forget the price cap” for the moment and encouraged everyone to check if they were on the best deal right now.
The government has said that it intends the price cap to be in place by next winter.