Ofgem energy price cap set to save Brits cash

The days of dreading winter price hikes from energy firms may soon be behind us.

Ofgem is working to put a price cap in place by the end of the year that will protect over 11 million households on poor value default tariffs[1].

Under new proposals, energy suppliers will have to keep their prices below £1,136 a year for dual fuel customers paying by direct debit. This may mean the end of excess charges for many Brits, saving those who use a typical amount of gas and electricity on a poor value default tariff £75 a year on average.

If you’re on the most expensive tariff and use a typical amount of electricity, you may stand to save over £120.

Of course, the exact amount of savings you enjoy will depend on the price of your current deal, how much energy you use, whether you have both gas and electricity and how you pay for your energy bills.

Each year in April and October, Ofgem will adjust the cap to reflect the estimated cost of supplying electricity and gas. This will mean businesses won’t come up short because of the cap, whilst ensuring consumers get a fairer deal.

Dermot Nolan, chief executive of Ofgem, said: “Once the price cap is in place, all households in Great Britain covered by the cap will be protected from being overcharged for their energy. Consumers can have confidence that falls in energy costs will be passed on to them and if costs increase, Ofgem will ensure that any rise will be due to genuine increases in energy costs rather than supplier profiteering.”

The energy price cap is only a temporary measure, however. Ofgem is hoping that by 2023 at the latest, there will be further, more long-lasting reforms to improve the energy market. This includes making it easier to switch suppliers, protecting customers from unfair price hikes and ensuring the market remains competitive.

Saving money until the energy price cap comes into effect

Here are our top tips to help you be a bit more energy efficient.

  1. Shop around for the best deals – compare energy deals to see if you could move to a cheaper tariff.
  2. Bleed your radiators – this will ensure they’re working as well as they should be, reducing the amount of time you’ll need them on before the house heats up.
  3. Get rid of draughts – find out where heat is escaping and seal it up. Edges of window frames, gaps under doors and letter boxes are the main culprits.
  4. Invest in a chimney blocker – air escapes up your chimney if you have an unblocked fireplace.
  5. Turn off your oven sooner – turning your oven off just before cooking comes to an end can save you money.
  6. Consider an eco-shower – a family of four can save around £72 a year on heating and £78 on water bills[2].
  7. Get your boiler serviced – it’s always a good idea to do this before the cold temperatures really kick in.
  8. Turn your thermostat down – if you lower your thermostat by just one degree you could save around £75 a year[3].

[1] https://www.ofgem.gov.uk/publications-and-updates/ofgem-proposes-price-cap-give-11-million-customers-fairer-deal-their-energy

[2] Savings taken from: https://www.lovemoney.com/news/18674/10-weird-ways-to-save-money-on-your-bills

[3] Based on a typical three-bedroom semi-detached home. March 2016, Energy Saving Trust