Ofgem’s Energy Price Cap has been extended until the end of 2021 in a move the government claims will see around 11 million households across the UK make savings on their energy bills.
The Energy Price Cap aims to protect less engaged customers such as the elderly and most vulnerable from being charged excessive prices – it is thought to have saved customers around £1 billion a year since its introduction in January 2019.
This is equivalent to around £75-100 a year for typical households on default energy tariffs.
The cap extension was recommended by Ofgem in August following a review of the energy market and the impacts of coronavirus.
An additional four million households with prepayment meters on default tariffs will also come under the protection of the cap from January, after the Competition and Market Authority’s Prepayment Meter Cap expires at the end of 2020.
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.”