Whoop, whoop, whoop!!
I’m pretty happy right now!
It’s great to hear from OFGEM (the energy regulator) that there is going to be a cap on energy prices 😊
What does the default tariff cap mean?
The whole idea about the default tariff cap is to protect consumers who don’t shop around.
Yes, I know we go on all the time about comparing energy prices and switching suppliers to get a better deal, but there are millions of people who haven’t.
There are an estimated 11 million households in the UK on expensive standard variable tariffs, which is a massive 50% of energy customers!
Whatever their reasons for not switching – they don’t know how to do it, they can’t be bothered, they didn’t realise – now they will start to make savings because of the standard variable tariff energy cap.
The standard variable tariff is what consumers get put on when their decent (cheaper deal) finishes. Some customers have been on this poor value tariff for years.
The energy company moves customers over to a really expensive tariff and makes big profits, while the customers pay over the odds for exactly the same service they received before.
Customers who get this price cap will see savings over up to £120 a month.
What happens next?
First up there needs to be a consultation.
This should take around four weeks and a final announcement about how the energy cap works will be made at the end of October/beginning of November.
The energy price cap is planned to be introduced on 31 December, meaning everyone on an expensive tariff will start the new year making a saving!
This is only a temporary fix and will be in place until 2020, but the government may extend it until 2023. Hopefully, energy providers will do something themselves to make energy costs fairer for everyone in the meantime!
I’m going to say it again…
It doesn’t matter if there is a cap on standard variable tariffs!
It’s hugely likely that you will still make a massive saving if you please, please just switch your energy provider!
It really does only take around 10 minutes and is no fuss whatsoever.
Try a quick comparison out now and see how much you can really save, then just plan what you’re going to spend your savings on 😊
Default tariff cap
There is already a safeguard tariff (also known as a ‘price cap’) for prepayment meter customers and people who receive the Warm Home Discount.
The safeguard tariff limits how much a supplier can charge you per kWH and is applied automatically to your bill.
Energy suppliers cannot charge you more than the cap Ofgem sets which stops you from being overcharged.
Overall, these caps protected 6 million people from being overcharged by energy companies.
Then, when this new standard variable tariff cap comes into place even more people will be protected further.
(I’ll say it again…you can still save more if you switch though 😉 )
So, this energy price cap will really have a great impact on the bank balances of so many people up and down the country!
Naomi knows the burden of living on very little and became debt free by learning from past mistakes and following her own money saving tips and tricks.