(Updated 24/10/2017) Energy Price Caps Are Back!
This is a tricky story to write about as we keep getting reversals of policy. Earlier in October Theresa May changed her mind again on energy price caps and it is now Government policy to have a price cap.
The price cap will only apply to people who are on a “Standard Variable Tariff” – known as a SVT. This is the tariff nearly all energy suppliers put you on if you forget to switch. Essentially its a rip-off tariff that charges extra for people who are loyal to their energy supplier and don’t switch regularly.
Its not just the Big Six suppliers who have these rip-off tariffs – almost all suppliers who have a cheap tariff also have an expensive one for people who forget to switch.
So what will happen?
THIS ONLY APPLIES TO PEOPLE WHO ARE ON AN EXPENSIVE SVT
The current best guess is that 1 million households who get Warm Home Discount AND are on a rip-off tariff will have a price reduction in the region of £100.
I get the Warm Home Discount. Does that mean I don’t have to do anything?
No! If you are an average user this would potentially mean that in February 2018 you will get a saving of about £100 for the next year – If you switch to a better deal now an average user will save about £250 NOW (at October 2017 prices) AND still get their Warm Home Discount.
I don’t get the Warm Home Discount. What should I do?
The price caps for everyone else on a SVT will start (probably/maybe) in the winter of 2018 … basically in at least 1 years time. Then an average user will start saving about a £100 per year.
If you do nothing, in the next year you will overpay by about £250.
In any event it is unlikely that the capped energy bill will be the best deal out there … but it won’t be quite as bad as it is now.
Your only option now is to switch to the best deal you can find. (If you receive a Warm Home Discount, make sure you switch to a supplier that supports the Warm Home Discount)
Sign-up to our mailing list and we’ll help you find a better energy deal … its quick and easy (and free). We even share our income with you – when we get a commission we give you most of it – £10 per fuel switched.
Is the price cap good news?
Yes – probably – it will help reduce the worst rip-off tariffs on the market. It may also remove some of the best deals too … but on balance we’d rather no one gets ripped off.
Apparently 12 million households are on SVT overpaying on their energy bills to the tune of £1.4 billion per year (according to a statistic from the Competition and Marketing Authority)
£1.4 billion = £1,400,000,000
Will it happen? who knows … but at least its clear that if you are on a rip-off “standard tariff” you are better off switching now rather than waiting for the Government to reduce your energy bills.
Disappointment of Energy Price Cap Being Dropped (June 2017)
Its very disappointing to read that the conservatives appear to have dropped their plan to cap energy bills for people on Standard Variable Tariffs (SVTs).
We now have a woolly statement from the Queen’s Speech:
“My government will ensure fairer markets for consumers, this will include bringing forward measures to help tackle unfair practices in the energy market to help reduce energy bills.”
– the Conservative Party manifesto had promised
“Fairer markets for consumers and action on the cost of living, including a safeguard tariff cap to protect energy customers from unacceptable rises.”
So what we have is a non specific watering down of the manifesto pledge. Over the last 7 years we have heard this sort of vague statement that governments or minister will intervene in the energy market to stop people getting ripped off on their energy bills …. but again and again nothing significant changes.
What choices are left to people struggling with their energy bills?
- Use less energy.
- better insulated houses – There is still help available for people on low incomes to insulate their houses – we will be sending out more details on this over the summer
- you can read a few more simple energy saving tips
- Switch your energy supplier
Does it matter?
Yes. The truth of the matter is that millions of people either don’t understand how they can switch their energy provider, have huge energy debts so they aren’t allowed to switch, or for some other reason can’ get round to switching. A price cap would have helped those people.
No. If you can be bothered to regularly switch your energy provider then the price cap would probably have resulted in smaller savings from switching.
On balance we’d prefer a price cap and fewer good deals … ideally we’d like to go out of business because its so easy to see what the best energy deal is that people don’t need collective switches or advice on choosing the best deal.
Just imagine if energy bills were as easy to compare as prices at a petrol station … We got no support or engagement from the Competition and Marketing Authority when we suggested this and they even refused to release the data that could prove that this is a sensible and viable option. It seems that the people the Government and regulators listen to are nearly all opposed to simple energy pricing and rather like the current situation.