Millions to benefit as energy price cap is passed
The Domestic Gas and Electricity (Tariff Cap) Bill has become law but it is expected to come into force this winter and will remain in place until at least 2020.
The exact level of the energy price cap has yet to be determined. But it is expected that the up to 12 million households stuck on expensive default tariffs will benefit from the cap which will be implemented by regulator, Ofgem, according to charity, Citizens Advice.
Gillian Guy, chief executive of the chairty, said: “The energy price cap will make a real difference to people’s lives. Capping prices for the 12 million people stuck on standard variable tariffs will stop firms overcharging customers who don’t or can’t switch supplier.
“Loyal customers have paid over the odds for too long. The passage of this bill should mean the cap is in place for winter, giving much-needed protection to households across Great Britain.
“While the cap is a significant step towards a better energy market for consumers, it is also important that price protections remain in place for vulnerable people once the cap is lifted.”
But Richard Neudegg, head of regulation at price comparison site, uSwitch, said the government must tread carefully when implementing the price cap.
“Previous regulatory interventions led to increased energy prices for consumers, so it’s vital this short-term measure is removed before it does lasting damage to competition and pushes up prices for everyone,” he said.
“If households believe this cap will protect them from price increases and stop shopping around for better deals then energy companies will remove their cheaper tariffs. This will hit hard-pressed households on poor value standard plans the hardest as they miss out on hundreds of pounds worth of savings.”
He added that switching to a better deal will save “far more than a cap ever could”, with households saving up to £482 by moving away from a standard variable tariff.