The new energy price cap

ABIG change to the energy market has just happened: On Tuesday the Government’s new price cap is introduced.

This cap is a way of stopping loyal customers, who don’t switch their supplier, from being ripped off.

Most people aren’t really aware of the energy market and suppliers know this. So they charge those customers much higher prices than they offer to people who shop around.

For a typical household, this might mean that you could be paying around £300 a year more than you need to.

The cap tries to make sure the prices customers pay are fair. However, it will still pay to shop around, as suppliers will offer better deals to those who switch in order to attract new customers.

Now, the price that people on default tariffs pay for each unit of electricity and gas they use will be capped by the energy regulator, Ofgem. Suppliers will be free to charge a lower price if they wish, but won’t be able to charge more.

If you’re on a prepayment meter, you won’t be eligible. This is because the prices you pay are already capped.

If you actively chose to sign up to your current tariff, you also won’t be eligible: The deals offered to customers who switch are typically much cheaper than default tariffs.

But if you are not on a prepayment meter and you are on your current tariff by default you should qualify for the cap.

Be aware that the cap will limit the price you pay for each unit of energy that you use—it doesn’t limit your total bill.

People who use more electricity and gas will still pay more than those who use less.

How much you save will vary depending on your personal circumstances and which supplier you are with. There is no guaranteed saving, but the average saving is around £76 per year.

If you’re eligible, you have two choices: do nothing or shop around. It is probably better to do the latter, as you’re still likely to save money if you switch supplier or tariff—the best deals are much cheaper than the cap.

If you do nothing, the price cap will be automatically applied to your tariff no later than 1 January.

If you want to shop around you could use our online price comparison tool: https:// energycompare.citizensadvice. org.uk/

You’ll need the name of your supplier and tariff – this will be on your energy bill. You can get a more accurate quote if you know your annual consumption – this is the amount of gas or electricity you’ve used over the last year, measured in kilowatt hours (kwh).

Find this on your annual statement if you have one.