Posted on 8th August 2019
The energy regulator, Ofgem, lowered energy price caps which means that the price of energy is set to fall for millions.
Ofgem sets the maximum prices that can be charged by energy suppliers for gas and electricity. The new cap could see millions of households pay £75 less per year.
Ofgem boss Dermot Nolan said: “The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.”
“This means the energy bills of around 15 million customers on default deals or pre-payment meters will fall this winter to reflect the reduction in cost of the wholesale energy.”
How do these price caps work?
Energy price capping was brought in under Theresa May, and is designed to protect the vulnerable.
From next year, Ofgem will set the cap twice a year for households in the UK (Except Northern Ireland who has a separate energy regulator).
The price cap is placed on the unit price of gas and electricity, as well as a maximum standing charge.
Energy suppliers are not allowed to charge default tariffs that are higher than these price caps.
How effective are the price caps?
The first price caps came into force at the start of the year, and have been revised twice since then. – Once in April, and again in October.
The price cap is effective in ensuring that consumers aren’t blindsided by default tariff price rises, however it is still much more cost effective to just switch supplier when the time comes.
Will my bill fall automatically?
The price cap is per unit of energy and not on the total energy bill. This means a family living in a 3 bed home will still use more energy and still pay more than someone living alone in a two bed flat.
The new price cap takes effect in October, just when people are starting to switch their heating back on.
Ofgem still encourage that people shop around for cheaper energy tariffs from other suppliers.
Find out more information from Ofgem here,
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