Money Wellness
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category iconbills
calendar icon28 Mar 2024

Ofgem considers big energy price cap changes

Energy bills may get cheaper for more than 90% of the country if Ofgem goes through with the new plans it’s considering.

The current price cap limits how much energy firms can charge for units of gas and electricity for customers on variable-rate tariffs paying by direct debit.

The average dual fuel price-capped bill is £1,928 a year, falling to £1,690 a year from April 1.

 But Ofgem  has said it wants to have a debate on the price cap to 'ensure customers are protected, they continue to pay a fair price for their energy, and they get to realise all the benefits of net zero'.

For example, the regulator expects to see a greater shift towards time-of-use electricity tariffs, which are currently rare. The Government also wants more electricity to come from renewable sources where supply can vary, such as from wind or solar power.

Ofgem thinks that the price cap could reflect that, for example offering a cheaper rate for electricity used at off-peak times. 

This is why they’re considering changes to the price cap:

  • Having more than one price cap depending on the time of day
  • Having different price caps for groups such as vulnerable consumers or those on pre-payment meters
  • Linking how much an energy firm can charge for its 'default' tariff to the price of cheaper energy deals they offer
  • Limiting how much profit energy firms can make from price-capped tariffs
  • Scrapping the cap entirely to replace it with rules that mean energy firms cannot offer cheaper deals to new customers unless they offer these to existing ones too

 Ofgem director general of retail and markets Tim Jarvis said: 'We're looking in detail at the elements of the price cap that have worked well and the challenges we've identified in recent years, while also considering how a wide range of future consumers will use and pay for energy, to make sure we develop the right measures that will protect and benefit consumers across the board.

'We will continue to work with government, industry, consumer groups, charities and the public on the future of pricing regulation. Our aim is ensure the market works for everyone.'

Fallen behind with your energy bills?

If you’ve fallen behind with your energy bills, the first thing you should do is get in touch with your supplier. Some offer grants to help customers who are really struggling or you may be able to agree a payment plan for the amount you owe.

If you're vulnerable, it’s also worth finding out if you can sign up to the priority services register. This is a free scheme that provides access to extra help from your energy supplier. Find out more about the priority services register

Read our guide on what to do about energy arrears.

Avatar of Lydia Bell-Jones

Lydia Bell-Jones

With a background in banking, Lydia has been writing professionally for over five years. She is passionate about helping people improve their personal finances and has a particular interest in the connection between money and mental health.

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