December 21, 2018
The energy market is currently not working for consumers who remain loyal to their energy supplier.
More than half of UK households are on their energy suppliers expensive default tariff. On average, default tariffs are around £320 a year more than the cheapest market deal.
The current UK Government pledged to cap energy prices and in November, Ofgem announced that the energy price cap would be going ahead on the 1st of January 2019.
So, what does this mean? We've written a short guide to help you make sense of it.
What is the energy price cap, and will it affect me?
The energy price cap will limit how much energy suppliers can charge customers per unit of energy. Ofgem has calculated what energy suppliers needs to spend to get energy to your home. Although, Centrica (the parent company of British Gas) has raised a legal challenge. They argue that the energy price cap has not been calculated fairly and would cost them £70m in lost operating profits in the first quarter of 2019.
Your energy prices will be capped if you use a prepayment meter, get the government's Warm Home Discount and/or are on a 'standard variable' energy tariff you haven't chosen (default).
If you are currently on a fixed-term tariff, your prices won't be fixed but you are likely on a better value deal.
If you are currently on a standard variable tariff, then you could save more money by shopping around for a better deal.
How will I know if the energy price cap applies to me?
Your supplier can tell you if you are on an energy tariff impacting by the energy price cap. They must also inform you if your tariff changes in a way that could disadvantage you or if you are a tariff that is no longer available.
Do price caps limit the total amount of my energy bill?
No. You still must pay for the energy that you use. The energy price cap won't limit your total energy bill.
For example, you might use more energy in the winter, so your bill will be more money than it has been during the summer.
The cap is on the cost per unit used. You must still pay for every unit of energy that you use.
Will the price caps change?
Every six months Ofgem will work out how much it costs energy suppliers, on average, to get energy to customers. They will then revise the cap levels to reflect this to ensure you pay a fair price and protect you against overcharging.
Ofgem will review the current price cap level in February and it will be changed on April 1st.
Are there any cheaper energy tariffs?
Yes! Most fixed-term deals will be cheaper than the energy price cap tariffs.
If you are on an energy tariff that will be capped, you would benefit more by comparing energy suppliers and moving to a cheaper, fixed-price deal.
Energylinx offers a free and impartial comparison and switching service and we will be able to find the cheapest energy deal for your home. You can find out how much you could save by calling 0800 849 7077 or by visiting our website.
Posted on December 21, 2018 at 04:04 PM