Energy price cap could be extended beyond 2023 and households given personalised switching advice under new Government plans
The energy price cap, which limits how much suppliers can charge households on poor value standard variable tariffs (SVTs), could be extended beyond 2023, while households on those tariffs will be given personalised switching advice, under new plans announced by the Government today.
As part of a new 'Energy Retail Strategy' unveiled today, the Government said it plans to introduce legislation to allow the price cap to continue beyond 2023 if needed. Existing legislation already provides for annual extensions until 2023, if recommended by the energy regulator Ofgem.
Some 11 million households are currently covered by the price cap, set at £1,138/yr for a typical dual-fuel (gas and electricity) household. This cap is reviewed twice a year, with changes coming into effect in April and October. In the next review, due on 6 August, the cap is expected to rise by over £100 from October to around £1,250/yr.
But if you're on one of these capped tariffs, you're free to switch away at any time. If you find choosing a new energy tariff confusing, try our free Pick Me A Tariff tool to find the cheapest deal based on your preferences. Or you can do your own full-market comparison via our Cheap Energy Club. Just bear in mind savings are likely to be massively underestimated as they're based on today's prices and don't factor in the likely £100+/yr you'll save from avoiding the expected October price cap hike.
Other Government measures include introducing autoswitching and extending the Warm Home Discount
In an effort to drive down energy bills, the Government said it would also:
- Trial a new autoswitching system in 2024. Under the plans, some consumers on costly tariffs would be automatically switched to cheaper ones unless they opt out. The exact details of how this will work are subject to a consultation, which launched today and will run until 15 October. But you don't need to wait until then if you find choosing confusing – for example, with our Pick Me A Tariff Every Year tool, you can fill in your preferences and get switched to the cheapest tariff every year with just one click.
- Extend the Warm Home Discount scheme. The scheme requires certain suppliers, by law, to help vulnerable people in the UK pay for their energy – you qualify if you get pension credit or certain other benefits. Under today's plans the discount will be extended, meaning eligible households will be able to get a £150 discount every year until the winter of 2025/6. For full eligibility criteria and details of participating suppliers, see our Housing & Energy Grants guide.
What does the Government say?
Business and energy secretary Kwasi Kwarteng said: “We want to unleash a wave of competition within the energy market and keep energy bills low so households across the UK can keep more money in their back pockets.
“An automatic switching system would ensure households get a fair deal, while new price cap legislation will enable continued protection until we’re confident the market is sufficiently competitive.”