Price cap to cut energy bills of 3m homes by £19 a year

THREE MILLION households are to see their energy bills fall by up to £19 a year as the regulator lowers a price cap aimed at protecting pre-payment customers.

The change, coming into force on October 1, will see the average annual dual fuel bill for pre-payment customers cut from £1,067 to £1,048, Ofgem said. The watchdog introduced a temporary safeguard tariff in April and will update it every six months based on the estimated cost of supplying energy.

It comes after British Gas last week said it will increase electricity prices by 12.5 per cent for 3.1 million customers, a move condemned by the Government and branded a “slap in the face” for families.

British Gas was the last of the Big Six providers to increase prices after it promised in December last year to freeze tariffs until August, with its rivals opting to raise bills at the start of the year.

The safeguard tariff is aimed to protect pre-payment meter customers, primarily those on poorvalue standard variable tariffs, from paying too much for energy.

It applies to households who pre-pay for their energy, mostly with coin or token-operated prepayment meters. They are among those least able to benefit from competition and are more likely to be vulnerable, Ofgem added.

The safeguard tariff is one of the Competition and Markets Authority’s (CMA) remedies stemming from its two-year investigation into the energy market.

A spokesman for the Department for Business, Energy and Industrial Strategy (BEIS) said: “This price cap was introduced in April to protect some of the most vulnerable households and the independent regulator has lowered it in response to falling costs for energy suppliers, taking into account wholesale prices, transmission costs and environmental policies.

“We want to see rapid progress on Ofgem’s commitment to safeguard more customers on the poorest-value tariffs, following its response to the letter from Greg Clark asking for action.”