Ofgem’s new energy price cap is here – should you still switch providers to save money?
On the 1st October 2019, a new energy price cap came into force which could see energy bill reductions for up to 15 million households. Previous price cap rules only applied to customers on prepayment meters and vulnerable customers claiming the Government's Warm Homes discount.
Ofgem, the UK's energy regulator implemented the price cap meaning there is now a ceiling on the maximum rate that an energy company can charge. Ofgem will review the energy price cap every 6 months, starting in April 2020.
What is the Ofgem energy price cap?
The price cap sets a limit on the cost of gas and electricity per unit and has been designed to protect consumers from being ripped off by suppliers. It is important to understand how the price cap works as it only sets a limit on the cost that can be charged per unit of energy, not the total energy a household can be charged for. So if you continue to use more energy than before the cap came into force, it is likely that you will still pay more.
Dermot Nolan, chief executive of Ofgem, said:
"The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.
“This means the energy bills of around 15 million customers on default deals or pre-payment meters will fall this winter to reflect the reduction in the cost of the wholesale energy.
“These customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it.
“Households can cut their bills further in time for winter, and we would encourage all customers to shop around to get themselves the best deal possible for their energy.”
Save more on your energy by switching
Energy companies often reserve their best prices for new customers, enticing them to switch with ultra-low energy tariff's (often for a limited period only). Once the offer period is over, customers are likely to be switched to a more expensive tariff. The energy price cap now means that customers that rarely switch are better protected, however, the best way to ensure you are on the cheapest energy tariff is to shop around and switch where necessary. Our article 'How to find the best energy deal' guides you through the process.
If you don't want to have to remember to switch your energy deal every year you can now sign up to an auto-switching service that does all of the hard work for you. We summarise the best free and paid for auto-switching deals in our article, 'Compare the best energy auto-switching services in the UK'.
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