Energy price cap could cost consumers £200

Energy price cap could cost consumers £200

The energy price cap that came into force on 1st January could cost UK households up to £200 a year, according the energy regulator.

Ofgem has said the cap, that prevents suppliers from charging more than £1,137 per year for default energy tariffs, could help 11 million households that have stayed with their suppliers but have been moved to the more expensive tariffs.

However, the regulators own impact assessment indicates the cap could reduce the number of households that shop around for cheaper deals by a third, which could cost up to £216 per year.

According to price comparison website Comparethemarket.com, the average consumer pays that switches supplier pays £216 less than loyal customers.

Peter Earl, energy expert for the site, said: “We remain concerned that the price cap will create a false sense of saving and protection. More worrying perhaps is that it will also encourage inertia.

“The reality is that shopping around and moving to the best fixed price deal remains the best and only effective way of making significant savings and keeping your bills low.”

Consumer watchdogs have also warned that the cap, in place until the end of 2020, could result in energy firms removing their cheapest deals from the market.

Centrica has recently announced it plans to launch a legal challenge against Ofgem over the price cap over the way in which the energy regulator calculated the cap in relation to wholesale cost of energy.

 

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