Worcester MP Robin Walker has welcomed today’s announcement by independent energy regulator Ofgem of the full details of the Government’s price cap, which is set to save the average consumer £75 per year on average.
In July, the Government’s Domestic Gas and Electricity (Tariff Cap) Act became law, giving Ofgem the powers to put a price cap in place. When the price cap is introduced suppliers will have to cut their prices to the level of or below the cap, proposed to be £1136 per year for a typical dual fuel customer paying by direct debit, forcing them to scrap excess charges for people on poor value default deals.
The exact savings each individual household would make will depend on the price of their current deal, how much energy they use, whether they have both gas and electricity and how they pay for their energy.
The cap would save consumers who use a typical amount of gas and electricity around £75 per year on average. 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 over £120. In total, the price cap would save consumers around £1 billion.
The ‘Safeguard Tariff’ – as the cap will be known – has been designed by Ofgem, who have been tasked with setting it at such a level that it still leaves considerable motivation for consumers to shop around for the best deal, but improves the terrible prices paid by some people.
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.”
Commenting on the news, Robin said:
“The announcement of the price cap detail is fantastic news for my constituents in Worcester. Those on the most expensive tariffs will be saving over £120 a year, and this delivers on a key manifesto commitment that will help local people keep more money in their pockets, and ensure the economy works for everyone.”
“It is also worth remembering that there is already a prepayment price cap in place protecting households least able to benefit from competition. In April 2017 a prepayment price cap came into force protecting over four million households using pre-payment meters – saving the average household £80 a year.”