Energy Price Cap Will Save Households £1 Billion

A new energy price cap comes into effect on the 1st January and it will save 11 million households up to £120 on their energy bills. But consumer groups warn that customers should not be lulled into a false sense of security by the new price cap imposed by the regulator. Ofgem says that the price cap savings will depend on the price of householders’ current energy plans.

The price cap is initially to be set at £1,137 per year for a typical customer paying for duel fuel by direct debit. When this new price cap comes into force next year, suppliers will be forced to cut the price of their costliest default tariffs, including standard variable tariffs, to fall below this cap. Default tariffs, described as ‘rip off’ by the Prime Minister, are the controversial tariffs that people end up being rolled onto when their fixed price deals come to an end.

The cap, it is said, will save customers using a typical amount of gas and electricity around £76 per year, and those on the most expensive tariffs could save £120 per annum. However, those getting excited about saving money on their fuel bills should note that the savings are not automatic. How much customers can save will depend on how much energy they use.

It is also worth noting that those who really want to save should really consider shopping around, as it is often possible to save a lot more on fuel bills by shopping around and getting a better deal from a different supplier. So the advice to energy consumers is to be aware of the deal they are on, and to make sure they are aware of any better deals that might be out there.

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