Simplified version of the latest energy tariff price cap
Find out what it means to you. If you are eligible for it. If you have to do anything to be on it.
What does this mean exactly:
The Government has passed a law which means the energy suppliers can only charge so much over a given period.
For example:
This cap is designed to protect your prices until 2020. Let’s say you are paying 16 pence per KWH for electricity and, your price has been capped at that. Your price will not be able to increase above 16 pence per KWH.
Assuming you use an average of 3100 Kwh of electricity each year and, you pay £80 standing charge, your electricity bill for the year would be £576. This price will not increase unless you use more than your usual 3100 Kwh of electricity.
The same would apply to your gas but, with different usage figures.
Who is eligible for the capped price tariffs?
This cap has been put in place to protect those who are on Standard Variable Energy Tariffs. These are the most expensive energy tariffs which around half the UK households are still on.
How do you know if you are on this tariff?
You will most likely be on a SVT (Standard Variable Tariff) if you have not switched to a more competitive tariff with one of the 80 plus, energy suppliers who give online discounted tariffs.
How to get the price cap
If you are on a SVT you don’t need to do anything. Your price will be automatically capped by your energy supplier.
Why is this happening?
Theresa May, made this one of her objectives when she became Prime Minister. The idea behind it, is to help those on the worse energy deals. Even though, OFGEM (Government Office For Gas and Electricity Markets) have been promoting the idea of consumers switching away from Standard Energy Tariffs, only half of energy consumers have actually switched to a cheaper deal.
How much will you save?
The Government reckon it to be an average of around £100 of a saving when your price is capped. This is primarily because your supplier won’t be able to increase your price.
What about those who are not on a Standard Variable Tariff?
Consumers who have switched away from these tariffs are already making savings of £300 plus each year. Therefore, no further savings will be offered or put in place. This new deal is only for those who don’t switch to cheaper energy deals.
Current example of some energy tariffs:
- Standard Variable Tariff – British Gas Dual Fuel. Price per year £1,160.58
- Online Saver – EDF Energy. Price per year £877.27
Prices were calculated on the date of this post using the Uswitch price comparison site. Prices are based on the tariffs shown in the Scottish Power region assuming an average usage of 3100 KWH of electricity and, 12500 KWH of gas. In addition, we made the assumption of currently paying when the bill comes in and, switching to paying by Direct Debit.
This information is based on average usage figures. You should get quotes based on your own figures for your specific region.