- Energy Price Cap extended until end of 2021, protecting
around 11 million UK households from being overcharged
- Households on standard variable and default energy tariffs
will continue to save between £75 and £100 a year on dual fuel
bills
- 2.8 million electricity and 2.1 million gas customers
switched supplier in the first six months of 2020
Around 11 million households
across the UK will be protected from being overcharged on their
energy bills thanks to an extension to the Government’s Energy
Price Cap until the end of next year.
The Energy Price Cap shields
those least likely to shop around for the best deals – including
the elderly and most vulnerable – from being charged excessive
prices.
Since its introduction in
January 2019,
the cap has saved customers around £1 billion a year,
equivalent to around £75-100 a year for typical households on
default energy tariffs.
An additional four million households
with prepayment meters on default tariffs will also come under
the protection of the cap from January.
Business and Energy
Secretary said:
“The Energy Price Cap has been
vital in ensuring customers do not pay too much on their bills,
which is why we are keeping it in place for at least another
year.
“Switching energy supplier to
find the best value deals is still the best way to save on
bills, but this government is determined to make sure all
customers are treated fairly and get the protection they
deserve.”
In addition to the price cap,
millions of customers have been able to benefit from lower bills
as the numbers of those switching to cheaper tariffs has
increased and the rollout of smart meters has progressed in
recent years.
A total of 2.8 million
electricity and 2.1 million gas customers switched supplier in
the first six months of 2020, building on record numbers of
households switching to cheaper tariffs in 2019, the first full
year of the Energy Price Cap.
However,
more than half of
customers are still on standard variable or default tariffs,
where, in the absence of the cap, they would likely still
be paying excessive charges for energy use.
In August, the independent
energy regulator, Ofgem, recommended an extension to the
cap following a review into the market. Today’s
announcement follows that recommendation.
The Energy Price Cap extension
is the latest Government measure to help vulnerable customers
with their energy bills and follows particular support during the
coronavirus pandemic.
Energy suppliers have given
prepayment and pay-as-you-go customers support when they faced
financial distress.
Those with prepayment meters
have also benefited from a price cap that is in place until the
end of the year.
Today’s announcement means a
further 4 million households with prepayment meters on default
tariffs will continue to be protected from excessive prices by
the wider Energy Price Cap once the Competition and Market
Authority’s Prepayment Meter Cap expires at the end of
2020.
, Chief
Executive of Ofgem, said:
“The Secretary of State’s announcement means that 15
million households will continue to be protected under the price
cap and will pay a fair price for their energy in 2021.
“Although those protected by the cap are paying a fair
price, they can also reduce their energy bills further by
shopping around for a better deal.
“Ofgem will continue to protect consumers in the difficult
months ahead as we work with industry and government to build a
greener, fairer energy system.”
Notes to editors
·Research by the
Competition and Markets Authority showed that consumers on
default tariffs had been overpaying the ‘Big Six’ energy
companies some £1.4 billion a year before the introduction of the
Energy Price Cap.
·The Energy Price
Cap, continuing through 2021, is set by energy watchdog Ofgem,
which reviews it every 6 months to reflect changes in the cost of
supplying energy. This ensures those who do not shop around,
often elderly and low-income households, are protected from
paying over the odds.
·In August, Ofgem
announced the price cap level for October 2020 to March 2021
would be £1,042 for typical users paying by direct
debit.
