Energy price cap for one million households

Ofgem has revealed that one million households will save £120 a year when the energy regulator extends its prepayment safeguard tariff for more vulnerable people this winter.

Prime Minister Theresa May had pledged to revive a plan to cap charges for an extra 12 million consumers, but Ofgem have said that government legislation would have to be enforced before such a move could materialise.

Instead, Ofgem’s prepayment safeguard tariff will initially be extended to 1 million more vulnerable households this winter whilst it works alongside the government to provide price protection to all standard tariff customers as soon as possible, if legislation is passed.

The one million households who get the Warm Home Discount will see an energy price cap from February, a move which will also apply to another two million vulnerable households the following winter.

Dermot Nolan, chief executive of Ofgem, said: “Ofgem shares the government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable. The government’s proposed bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.

“In the meantime, we expect suppliers to do more to get customers on poor value default tariffs onto better deals. We also expect suppliers to co-operate when Ofgem initially introduces a safeguard tariff for around one million vulnerable households this winter. The introduction of further price protections will give time for Ofgem’s reforms to work and for smart meters to be rolled out across the country as we move towards a smarter, fairer, more competitive market.”

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