UK Sets Energy Price Cap for Retail Users

UK domestic consumers will find their energy bills capped from this winter, said the UK government's Department for Business, Energy and Industrial Strategy (Beis) July 19.

The Domestic Gas and Electricity (Tariff Cap) Bill completed its passage through parliament July 18 2018, and the energy regulator Ofgem will cap standard variable and default energy tariffs. A government spokesperson said that Ofgem would consult with industry on the best way to do that over the summer. Opponents of a cap have said that retailers would push up their prices before the cap comes into place.

The cap will be in place from the end of 2018 until 2020 when Ofgem will recommend if the cap should remain on an annual basis up to 2023. Ofgem will review the level of the cap at least every six months while it is in place, the statement said.

Ofgem data comparing the default or standard variable tariffs of the 10 largest energy suppliers shows that these tariffs are still around £350 ($455)/yr more expensive than the cheapest deals on the market.

Beis published draft legislation in October 2017. In mid-2017 elections, the governing Conservative party promised to introduce the price cap, effectively taking the idea from the opposition Labour party.