The government has announced plans to extend the energy price cap until the end of 2021.
According to the Department for Business, Energy and Industrial Strategy (BEIS), the new cap will mean that 11 million households across the UK will save on energy over the next year.
“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,” said Alok Sharma, the Business and Energy Secretary.
“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.”
The price cap was initially introduced in January last year after Theresa May hoped to end “rip off” tariffs from suppliers. The price cap was lowered over summer as wholesale gas prices plunged to a 20-year low.
Jonathan Brearley, Ofgem’s chief executive, said the regulator would “continue to protect consumers in the difficult months ahead as we work with industry and government to build a greener, fairer energy system”.
Peter Earl is the head of energy at Comparethemarket.com. He said: “There is a real risk that the British public interpret the government’s extension to the price cap as an endorsement that the cap is an affordable price to pay for energy, when it reality it should be considered the absolute ceiling that people pay.
“There are currently 191 energy tariffs on the market cheaper than the £1,042 price cap, and as the temperature drops and people turn the heating up a notch or two, switching to a competitively priced one or two year fixed-rate deal is an effective way for households to lock-in a cheaper energy deal,” he added.