Government extends cap on energy bills

An extension to the government’s Energy Price Cap until the end of next year is set to help 11 million households from being overcharged on their energy bills.

The Energy Price Cap, first introduced in January 2019, shields those least likely to shop around for the best deals – including the elderly and most vulnerable – from being charged excessive prices. Since its introduction, the cap has saved customers around £1 billion a year, equivalent to around £75-100 a year for typical households on default energy tariffs.

The government says that an additional four million households with prepayment meters on default tariffs will also come under the protection of the cap from January.

A total of 2.8 million electricity and 2.1 million gas customers switched supplier in the first 6 months of 2020. However, more than half of customers are still on standard variable or default tariffs, where, in the absence of the cap, they would likely still be paying excessive charges for energy use.

Business and Energy Secretary Alok Sharma said: “The Energy Price Cap has been vital in ensuring customers do not pay too much on their bills, which is why we are keeping it in place for at least another year. Switching energy supplier to find the best value deals is still the best way to save on bills, but this government is determined to make sure all customers are treated fairly and get the protection they deserve.”