Ofgem unveils 'fair deal'
Consumers save more than £120 in new price cap ruling
Many dual fuel customers will see a big saving in bills
Gas and electricity consumers will save more than £120 a year under tough new price caps announced today by the energy regulator.
Suppliers will be forced to cut prices to within £1136 a year for a typical dual fuel customer paying by direct debit.
It will mean scrapping excess charges for people on poor value default deals.
The cap should save the average consumer £75 a year. Many consumers on default deals use more energy than a typical household so their savings would be higher, while those who buy their electricity and gas from different suppliers would also save more.
A typical consumer on the most expensive tariffs would save more than £120. In total, the price cap would save consumers around £1 billion.
The cap a new law passed on 19 July and gives Ofgem a duty and the powers to put the price cap in place. Ofgem is working to have the cap in place by the end of the year.
Dermot Nolan, chief executive of Ofgem, said: “Ofgem has made full use of the powers Parliament has given us to propose a tough price cap which will give a fairer deal to consumers on poor value default tariffs.
“Once the price cap is in place, all households in Great Britain covered by the cap will be protected from being overcharged for their energy. Consumers can have confidence that falls in energy costs will be passed on to them and if costs increase, Ofgem will ensure that any rise will be due to genuine increases in energy costs rather than supplier profiteering.
“Households protected by the cap will be able to save even more money by shopping around for a better deal. Meanwhile Ofgem will continue with reforms which aim to deliver a more competitive retail energy market which, combined with protection for those who need it, works for all consumers.”
Ofgem will update the level of the cap in April and October every year to reflect the latest estimated costs of supplying electricity and gas. This ensures households who are covered will always pay a fair price for their energy.
The price cap is designed to be a temporary measure, in place until 2023 at the latest. This will allow Ofgem to put in place further reforms to make the energy market more competitive and work better for all consumers, including making switching energy supplier easier, quicker and more reliable.