Around a million households who receive the Warm Home Discount should save an average £120/year on their energy bills when the regulator extends its prepay price cap to some credit meter customers within the next few months.

Ofgem will extend the price cap by requiring energy firms to automatically put credit meter standard variable tariff customers who get the Warm Home Discount - ie, 'vulnerable' customers - on a temporary 'safeguard tariff'.

The regulator says it will then plan to further extend the cap to two to three million more vulnerable households for winter next year, as part of a series of plans announced today to tackle high energy prices.

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Who will benefit from this price cap?

Anyone who's on a standard variable tariff, gets the Warm Home Discount - a one-off rebate on electricity bills available to vulnerable customers - and isn't already covered by the prepayment price cap will be put on this new capped 'safeguard tariff'.

Those who get the Warm Home Discount but are currently on a fix WON'T see their prices capped.

What will the price cap be?

Ofgem will set a maximum price which suppliers can charge for the 'safeguard tariff'. It will be at the same level as the current price cap for prepayment customers, so an average £1,048/yr for a typical user, though it'll vary by region.

What if I have a prepayment meter?

If you're a prepaid customer, the rate you pay will already be subject to Ofgem's prepayment price cap.

Will the price cap be extended?

Yes - Ofgem says it then plans to extend the price cap to another two to three million vulnerable households next year, though it has yet to consult on how to identify these vulnerable households.

What about the Government's wider price cap?

The price cap for vulnerable households is separate to plans for a wider cap on all standard variable tariffs, which was announced by the Prime Minister Theresa May last week. The Government is expected to give more details of how that could work when it unveils new draft legislation on Thursday.

No more standard variable tariffs?

Alongside the price cap announcement, Ofgem announced new rules allowing suppliers to roll customers who are coming to end of a fixed tariff onto another fixed deal, instead of a standard variable tariff.

Suppliers will only be allowed to do this if the new fixed deal:

  • Does not have any exit fees.
  • Is the same price or cheaper than the variable tariff the customer would have been rolled onto.
  • Is similar to the customer's current tariff, for example in payment method, meter type, tariff type and duration.

Some suppliers including E.on are already planning to ditch standard variable tariffs after Ofgem's initial proposals were published in a consultation back in August.

Automatic compensation for failed switches

Under a separate initiative aimed at boosting confidence in switching in general, Ofgem also confirmed proposals for customers to get automatic compensation if a switch goes wrong.

Currently, when there's a problem with a switch - if it fails for any reason, is delayed or only one fuel is accepted when trying a dual-fuel switch - consumers have little choice but to chase the supplier and follow the complaints process.

'We expected suppliers to do more'

In statement, Ofgem said: "The Government’s proposed bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.

“In the meantime, we expect suppliers to do more to get customers on poor value default tariffs onto better deals.

“We also expect suppliers to co-operate when Ofgem initially introduces a safeguard tariff for around one million vulnerable households this winter."