Energy Price Cap April 2020
Ofgem have announced, the next energy price cap, set to be capped in April 2020, will be lowered by an average of £75 for normal credit customers, and £25 for prepay meters.
What does this mean?
Twice yearly (April and October), Ofgem set the maximum amount that energy suppliers can charge per unit of electricity and gas. This is to protect customers who normally pay the most expensive tariffs.
What are the most expensive energy tariffs?
Standard Variable Tariff, and prepay meter tariffs are the most expensive.
Does the price cap mean you are getting a good energy deal?
No. It just means the price you pay per KWH for your gas and electricity cannot be increased above the capped rate over the six month cap period.
Why has Ofgem introduced this energy price cap?
Since the energy industry was privatised, Ofgem have been promoting the idea you should switch energy
supplier to get a cheaper energy deal. Millions of consumers have been switching to get a cheaper price. However, this left the consumers who don’t switch supplier on the most expensive prices. In addition to non switchers being left on the most expensive energy prices, they were also not protected from very high increases.
In other words, customers who don’t switch supplier would always pay the most because the suppliers know they won’t switch, and can gain their biggest profits from the non switchers!
Energy Price Cap V Online Tariff
These are the current typical prices for an average energy user
- Energy Price Cap: At the time of this post the figure for Southern Electric Customers was within the price cap at £1187. The actual price cap is: £1213.33
- From April, the maximum they can charge for average energy usage will be: £1188.58
- Online tariff: £844
Further explanation on different prices
- Energy Price Cap: If you haven’t switched to a cheaper energy deal, and you don’t care to do so, it is unlikely your price will change. Although the price cap is dropping slightly, if your supplier is already charging below the maximum allowed by OFGEM, they are not required to lower their prices any further
- From April, The price cap is dropping by £24.75. Again, if your supplier is already charging you below the price cap level, they are not required to give you the extra £24.75 off your bill.
- Online tariff: Cheaper online energy deals are not really affected by the price cap as they are way under the capped price. Currently you can get around £340 off your capped or Standard Energy price by switching to a discounted online tariff.
Get quotes based on your own usage
Information on the figures
Figures shown were calculated on the date of this post. Average energy usage of 12000 KWH gas and 3100 KWH electricity was entered into the uSwitch price comparison website. A postcode was selected in the Southern region. The figures are a typical example for average energy usage. To get accurate figures for your personal usage, you should visit a comparison site and enter your own postcode and how much gas and electricity you use.
Standard credit meter on Southern Electric standard energy was used for the price cap figure. Online tariff is from E.ON