Britain’s energy price cap to protect 11 million households on rip-off gas and electricity tariffs will come into force on January 1, saving consumers up to £120 each.
But regulator Ofgem revealed the cap is already likely to be increased next April due to soaring wholesale energy costs.
The cap will collectively save customers around £1 billion by limiting the amount providers can charge for poor-value standard variable tariffs.
Ofgem said the cap was to be initially set at £1,137 per year for a typical dual fuel customer paying by direct debit.
It will save households around £76 per year on average, with those on the most expensive tariffs saving £120.
But Ofgem added it is likely to announce just a month later that the cap will be increased, to take effect in April, after wholesale energy costs have risen “significantly” over the past year and continue at the same pace.
The cap is set to be updated every April and October to reflect the latest estimated costs of supplying electricity and gas, including wholesale costs.
Ofgem chief executive Dermot Nolan said: “The price cap will ensure that, whether energy costs rise or fall, suppliers are not feathering their nest and changes in energy prices will reflect the underlying costs to heat and light our homes.”
He added: “Consumers who want to cut their bills further should shop around for a better energy deal.”
Gillian Guy, chief executive of Citizens Advice, said: “This price cap will finally offer some much-needed protection for loyal households on default tariffs.”
But Stephen Murray, energy expert at MoneySuperMarket, warned that the cap was “not sustainable”.
So what do you think?
Tell us in the comments.
Who will hold the powerful to account?
Real, independent, investigative journalism is in alarming decline. It costs a lot to produce.
Many publications facing an uncertain future can no longer afford to fund it, meaning journalists are losing the ability to hold the rich and powerful to account.
Pledge as little as £1.00 to help us support independent investigative journalism