15 million customers set to benefit from energy price cap fall
15 million households will see their energy bills fall for six months if on an energy price cap according to energy regulator Ofgem, but they could be saving even more!
If on the lookout for a potential energy switch: "Households can reduce their energy bills further by shopping around for a better deal.”
Ofgem, who aim to: "make a positive difference for consumers by promoting competition in the energy markets and regulating networks", are lowering the price cap.
The price of a default cap is set to decrease by £17 from £1,179 to £1,162 between the summer period (April-September). This decrease will help around 11 million customers whilst around 4 million customers, who are protected by the pre-payment meter cap, are also set to see their price cap be lowered by £17. The pre-payment meter cap will drop from £1,217 to £1,200 per year for the same six month period (April-September).
Ofgem explained that price caps are "a cap on a unit of gas and electricity, with standing charges taken into account. They are not a cap on customers’ overall energy bills, which will still rise or fall in line with their energy consumption"
Detailing the reason for the decrease in the price cap, Ofgem stated: "A large part of the reduction in the caps is due to wholesale energy prices continuing to fall between August 2019 and January 2020. A strong supply of gas, such as record amounts of liquefied natural gas and healthy gas stock inventories, has been the main factor pushing down wholesale prices.
"These reductions offset cost increases totalling £22 of other elements such as operating costs, network charges, smart meter costs and environmental schemes, resulting in an overall reduction of £17 in the level of the default tariff cap."
The reason for price caps were to "protect consumers who do not switch from overpaying for their energy", if on default or standard variable tariffs.
However even with this price reduction chief executive at Ofgem, Jonathan Brearley, urged people to look around for better deals.
“Suppliers have been required to become more efficient and pass on savings to consumers. In its first year, the cap is estimated to have saved consumers £1 billion on average on their energy bills and switching rates have hit record levels.
“Today’s announcement is further good news for the 15 million households covered by both price caps who will see their energy bills fall in April.
"Households can reduce their energy bills further by shopping around for a better deal.”
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