Energy bill cap will save homes £75
Targeting rip-off tariffs claws back £1bn
More than 11m households will save a combined £1bn a year under plans to cap rip-off gas and electricity tariffs at £1,136, it has been announced. A typical customer will save around £75 a year on average.
MORE THAN 11m households will save a combined £1bn a year under “long overdue” plans to cap rip-off gas and electricity tariffs at £1,136, it has been announced.
A typical customer will save around £75 a year on average, with those on the most expensive “default standard variable tariffs” saving more than £120 a year when the cap comes into effect.
The move by Ofgem was welcomed yesterday but also led to calls for the Government to take action to help people facing costly payments for mobile phone use, broadband and insurance.
Leeds West Labour MP Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Select Committee, said: “The energy price cap is long overdue.
“The Big Six energy companies have been ripping off their customers for far too long and the price cap is a crucial step in helping to fix our broken energy market.”
Ofgem has proposed to set the cap for the typical dual fuel customer paying by direct debit at £1,136 a year for gas and electricity, forcing suppliers to cut prices to that level or below.
The regulator, which was given legal powers by the Government in July to introduce the cap, hopes to have the measures in place by the end of the year.
Gillian Guy, chief executive at Citizens Advice, said: “A cap on default tariffs is a good start in tackling the cost of being a loyal consumer. We’d like to see the Government take action on the equally unfair loyalty penalties which exist in other markets, such as mobiles, broadband and insurance.”
“Citizens Advice has found that these can cost people up to £1,000 a year.”
Dermot Nolan, chief executive of Ofgem, said: “Once the price cap is in place, all households in Great Britain covered by the cap will be protected from being overcharged for their energy.
“Consumers can have confidence that falls in energy costs will be passed on to them and if costs increase, Ofgem will ensure that any rise will be due to genuine increases in energy costs rather than supplier profiteering.”
Greg Clark, the Business and Energy Secretary, said details of the cap outlined by Ofgem give households confidence that “when energy costs fall their bills will too”.
Ofgem has already capped bills through its safeguard tariff for 4m pre-payment meter households, which was extended in February to 1m more vulnerable consumers on poor-value default deals who already received the Government’s Warm Home Discount.
Stephen Murray, energy expert at MoneySuperMarket, said households would be better off switching to save money than relying on the cap to give them a fair deal. He said: “Don’t get lulled into a false sense of security by the political soundbites – the easiest way to bring down your bills is to go online and switch now to a competitive fixed-rate tariff.”
Industry group Energy UK said the cap will pose a “significant challenge” to many suppliers.
The Bix Six energy companies have been ripping customers off. Rachel Reeves, Business, Energy and Industrial Strategy Select Committee.