UK Regulator Caps Standard Household Tariffs

British default electricity and gas tariffs will be capped from January 1 2019 at £1137 ($1486)/yr for a typical dual-fuel household customer paying by direct debit, regulator Ofgem said November 6.

When the price cap comes into force suppliers will have to cut the price of their default tariffs, including standard variable tariffs, to the level of or below the cap, forcing them to scrap excess charges. 

The cap will be updated in April and October every year to reflect the latest estimated costs of supplying electricity and gas, including wholesale energy costs. This will ensure that those protected always pay a fairer price for their energy. Ofgem said that with rising wholesale prices, the cap is likely to go up next year.

The cap will save customers who use a typical amount of gas and electricity around £76/year on average, with a typical customer on the most expensive tariffs saving £120.

The savings for individual customers will depend on how much energy they use, the price of their current tariff, whether they have both gas and electricity and how they pay for their energy. In total, the price cap will save consumers in Great Britain around £1bn ($1.3bn).  Moreover, households protected by the cap will be able to save even more money by shopping around for a better deal. 

“Consumers who want to cut their bills further should shop around for a better energy deal and while the cap is in place, we will continue our work to make this as easy as possible,” said Ofgem. According to government figures, consumers can save up to £285 by switching from a default tariff offered by the Big Six energy suppliers to the cheapest deals on the market.

There was no comment from the biggest of these, Centrica, at time of press.  The price cap applies in Great Britain; Northern Ireland has a separate energy regulator (Uregni).