Energy price cap adds £1.1 billion to people’s bills

This week, Ofgem, the energy regulator is reviewing the price cap.

It’s widely expected that the price cap level – currently at £1,137 – will increase by around £100.

Our new research shows that this will add a huge £1.1 billion to people’s energy bills.

Why is the price cap going up?

The price cap was set at £1,137 on the 1st of January 2019.

Ofgem will announce the new level on Thursday 7th of February and the rise will come in in April.

There are an estimated 11 million households on the standard or default tariff – the tariff which has to comply with the cap.

Our analysis has shown that collectively people’s bills will go up by a huge £1.1 billion.

Households on the SVT or default tariff 11 million
Current price cap per household £1,137
Estimated new price cap per household £1,237
Total cost increase £1.1 billion

How is the price cap decided?

Ofgem reviews the cap every few months depending on factors such as wholesale gas prices and policy costs.

This is expected to be a substantial jump. The average price rise for the Big Six in 2018 was just £70 in comparison.

You can read our full analysis of all the price rises in 2018 here.

Is the price cap a fair deal?

We are the only auto-switching service who have welcomed the price cap as a way to stop people paying excessive amounts.

That’s because the price cap was brought in with the aim of saving people money, an estimated £76 per household. 

However, while green energy companies Pure Planet and Bulb have said they will keep their prices below the cap, most suppliers regard the price cap as an ambition to aim for rather than the ceiling it was set out to be.

The price cap is the maximum a supplier can charge their customers on their default tariff. The Big Six have raised their default tariffs right up to the price cap maximum so it’s likely they will do so again.

How do you protect from the price cap?

Sign up to our service and we will find you not just a safe or fair deal but a great deal that saves you money! The best part is you only have to sign up once and we will do this for you every year.

Sign up to Look After My Bills here