Why the energy price cap could cost you money

Last year, we overspent on our energy bills by a staggering £1.4bn because 70% of users are on more expensive Standard Variable Tariffs (SVTs). This has prompted the introduction of the energy price cap.
A SVT is the contract you’re put on when you haven’t chosen a specific energy plan. Most often it happens after a fixed rate deal has expired. So if you sign up to great 12 month deal, when it ends you’ll be put on an SVT contract.
If you stay on this rate, you could end up overpaying by as much as £300 a year, according to figures from Citizen’s Advice.
The Domestic Gas and Electricity Bill, which sets out an energy price cap on how much energy companies can charge customers, was introduced on 1 January 2019 in a bid to end expensive bills.
However, the energy price cap has already risen – just 11 weeks after coming into force.
On the 8th February the government announced that it will increase the £1,137 annual cap by £117 for typical dual fuel policy paid by direct debit. This means that all suppliers will have to reduce all tariffs to this level or below. Reduced tariffs- that can’t be bad I hear you cry. Read on…
A Blow to Millions of Households who were Relying on the Cap to Save them Money.
A spokesperson said: ‘Capped prices only increase when the underlying cost of energy increases. Equally when costs fall consumers’ bills are cut as suppliers are prevented from keeping prices higher for longer than necessary.’ Recent increases in wholesale prices are said to be the reason behind the price hike.
For those of us who are bad at switching, the move could save us money. By capping the amount that energy companies charge on their standard contracts, it means that we won’t be penalised for not shopping around. However, as the recent cap increase shows, it isn’t an end to energy price increases.
However, those of us who do regularly switch may be worse off. Energy companies have already hinted that a cap on SVTs may lead to them scrapping some of their better deals, so if you’re a diligent switcher you’ll see fewer of the really great rates available.
Take Control of Your Energy Bills
If you really want to take effective control of your energy bills then why not generate your own electricity? At Energy Gain UK we have been helping homeowners and businesses to reduce their electricity costs by up to 80% for the last 10 years.
If you would like to find out more about how you could take control of your energy bills give us a call on 0161 330 7739 or fill the form below.