Ceiling on energy bills for 15 million UK homes extended until 2021 | Energy industry

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The government has pledged to limit the energy bills of 15 million homes until at least the end of next year after agreeing to extend the energy price cap beyond 2020.

Under the legislation, ministers could have dropped the cap on standard variable energy tariffs – introduced in early 2019 to prevent “fraudulent” energy deals – by the end of this year.

But government officials and the regulator have agreed to extend the cap after households saved £ 1bn last year, or between £ 75 and £ 100 per year for an average house using the standard bi-energy tariff. energy.

Alok Sharma, the business and energy secretary, said the cap has been key to ensuring customers don’t overpay on their bills, “that’s why we’re keeping it in place for at least a year.” .

He added: “Changing energy supplier to find the best deals is still the best way to save on bills, but this government is committed to ensuring that all customers are treated fairly and benefit from protection. they deserve. ”

The energy cap legislation tasked the sector regulator to set a fair cap on standard tariffs every six months to reflect the changing cost of supplying energy in early 2019.

Ofgem said in August that the cap for this winter would fall by an average of £ 84 per year for 11 million households and £ 94 per year for an additional 4 million households using a prepaid energy meter.

The cap was first proposed in 2013 by former Labor leader Ed Miliband to prevent large energy companies from profiting at the expense of loyal customers by using standard variable energy offers rather than seeking fixed tariffs cheaper.

Major energy providers have lobbied the Conservative government against similar plans and have reportedly called for an end to the cap as soon as the law allows at the end of 2020. It could remain in place until the end of 2023 according to as the energy market evolves to become more competitive and fairer for customers.

Jonathan Brearley, chief executive of Ofgem, said the government’s decision to extend the price cap beyond 2020 means 15 million homes “will continue to be protected below the price cap and pay a fair price for their energy in 2021 ”.

The regulator has established new rules to protect vulnerable households during the coronavirus crisis, which call on energy providers to offer customers who are struggling to recharge their prepayment meters or pay their meter credit bills. emergency or payment plans this winter.

“Ofgem will continue to protect consumers in the difficult months ahead as we work with industry and government to build a greener and fairer energy system,” added Brearley.

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