Ofgem disappoints with modest cut to energy price cap

The electricity regulator has lowered its value cap, saving some 15 million households £17 a yr, but mainly protecting its position for one more six months.

The the greater part of households will now have their electricity payments capped at £1,162 per yr from April, when those with pre-payment meters will not have to commit far more than £1,200 a yr.

Launched by Ofgem very last yr, the cap is supposed to guard prospects by delivering fair electricity rates.

Many thanks to a heat winter season and an abundance of gas, wholesale rates have plunged to their cheapest issue in far more than 12 months, main some to speculate that the value cap could possibly be minimize by up to £60.

However, Ofgem reported that when the price of raw products for electricity payments experienced dropped by £38 to £408 between August and January, those price savings experienced been offset by added fees from Government-imposed renewable obligations on electricity suppliers that are handed on to prospects. 

Jonathan Brearley, the regulator’s chief govt, reported the cap had saved consumers £1bn on their electricity payments, but added that purchasing all over for a greater offer could conserve them even far more.

In the latest decades, the electricity current market has been flooded with modest suppliers presenting more cost-effective specials in an attempt to undercut huge players this sort of as Centrica and EDF. 

As wholesale fees have fallen, the so-referred to as Huge Six electricity firms have joined this race to the base, slashing the fees of their tariffs to contend.

Investigate released this week suggested that just less than a quarter of all the UK’s cheapest electricity suppliers have absent bust in the earlier a few decades, calling in to dilemma the sustainability of those corporations nevertheless presenting cut price energy tariffs.