An energy bill price cap of £1,136 a year for "typical usage" has been proposed by the regulator, Ofgem.
It says the move will mean 11 million households on default deals will save about £75 on average, although the amount households could save will depend on their usage and supplier.
The planned cap will be confirmed in November, take effect at the end of December and stay in place until 2023. Full article https://www.bbc.co.uk/news/business-45422218
At a time when wholesale energy prices are at a 3 year high, the long awaited domestic price cap for Standard Variable Tariffs (SVT) is finally set at £1,136 based on an average household using 3,100 kWh of electricity and 12,000 kWh of gas per year.
It could, according to some, be a tax on the more mobile and discerning energy user who may see dwindling savings on offer through switching. Suppliers are already switching profit from SVT to the tariffs used by these more “energised” consumers as can be seen in the narrowing differences between the cheapest and most expensive tariffs available from the market.
Should we expect that more customers will switch to one of the 70 alternatives to the Big 6 as a result of the cap, or will those who benefit simply see it as a justification for continued inertia? We might hope they seek the bigger savings from the 100+ tariffs which are cheaper than this new capped level.
For those who continue to stay put we can ask how much of the £75 to £120 savings due to the cap are actually realised. This will become apparent only when suppliers announce their end of year results, or switching statistics show households voting with their wallets.
As so many consumers have been on SVT and with the same suppliers for so long, another attempt to shock the domestic consumer may go the way of previous efforts. Time will tell if heralds a new dawn of the competitive energy market. This “cap” also sets a ceiling at a time when some suppliers have already implemented 2 price hikes this year. If wholesale and hence supplier costs revert to more acceptable levels, does the “cap” become a “target” by which the Big 6 in particular can profit?
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