Energy price cap extended for a year protecting 11m households
About 11m UK households will be protected from being overcharged for their energy bills for another year after the government decided to extend its price cap.
The cap, which saves households on standard variable and default tariffs between £75 and £100 every year, will now last until the end of 2021.
Since it was first introduced at the beginning of 2019, the protection has saved consumers an average of £1bn a year.
It has also hit the margins of some energy companies hard, with multiple suppliers going bust as the cap hit an already crowded market.
An additional 4m households with prepayment meters on default tariffs will also come under its protection from January.
Business 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.”
He also encouraged customers to look into switching energy supplier in order to get the best value for money.
Around 2.8m customers switched electricity providers in the first six months of the year.
Today’s decision came after watchdog Ofgem made the recommendation to extend the price cap back in August.
Richard Neudegg, head of regulation at Uswitch.com, said it was no surprise that ministers had heeded the regulator’s advice.
“The extension of the energy price cap will be reassuring news for millions of people who are facing financial uncertainty this winter.
“[But] there is a lot of work still to be done reforming and modernising the way the energy market works.”
Earlier today Ofgem also announced extra protections for vulnerable customers who could struggle to pay their bills over the winter.
Suppliers will be required to offer emergency credit to customers who cannot top up prepayment meters.
And if customers are in debt, suppliers must put them on “realistic and sustainable” repayment plans.