Ofgem sets proposals for new tariff price cap

11 million households on poor value deals will save around £75 on average, says the energy regulator Ofgem.

Ofgem also says that those on the worst deals will save up to £120 per year.

The regulator’s plan would see energy suppliers being forced to cap their annual tariffs at £1,136.

“The exact savings each individual household would make will depend on the price of their current deal, how much energy they use, whether they have both gas and electricity and how they pay for their energy,” Ofgem said.

The watchdog suggested that many consumers on default tariffs use more energy than a typical household, so their savings would be higher.

“Those who buy their electricity and gas from different suppliers would also save more,” Ofgem said.

The regulator was given powers by the Government to introduce the cap through the Domestic Gas and Electricity (Tariff Cap) Act, which became law on July 19 this year.

Ofgem hopes to have the measures in place by the end of the year.

Dermot Nolan, Ofgem chief executive said: “Ofgem has made full use of the powers Parliament has given us to propose a tough price cap which will give a fairer deal to consumers on poor value default tariffs.

“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.”

Mr Nolan also said that in addition to the tariff cap, UK households could make further savings by shopping around for better deals.

The regulator plans to update cap levels in April and October every year to reflect the most recent estimated costs of supplying gas and electricity, but said the cap was a “temporary measure” in place until 2023 at the latest.

(c) Sky News 2018: Ofgem sets proposals for new tariff price cap