What’s the Worth Cap?
The worth cap was introduced by the federal government in 2019 to stop giant vitality corporations, just like the historic Large 6 (British Gasoline, EDF, E.ON, Npower, SSE, Scottish Energy), from overcharging loyal prospects with extortionately costly default tariffs. The cap for common annual consumption was initially set at £1,137.
Since its introduction in January 2019, the worth cap has saved households on default tariffs an estimated £100 a yr every, or over £2 billion in whole on their vitality payments.
What’s occurring now?
Ofgem, the trade regulator, calculate the extent of the cap primarily based on vitality provider community prices, the typical overheads of every provider and renewable energy subsidies, amongst different issues. They evaluation the extent each 6 months, and modifications come into impact each April and October.
Ofgem introduced on the sixth August that the cap will rise by £139 to £1,277 a yr for the everyday twin gasoline dwelling, as of 1st October 2021.
Though it is a huge rise, the affect for purchasers would have been even larger with out the worth cap. The prices vitality retailers incur to purchase vitality have elevated by virtually 80% because the starting of the yr – from £418 in January to £747 in August 2021.
What does that imply?
It’s anticipated that many suppliers, together with the legacy Large Six, will view the worth cap as a goal, slightly than a restrict – elevating their poor worth default tariffs to squeeze as a lot cash out of their prospects as the brand new worth cap stage will permit.
If you happen to’re an Octopus Vitality buyer, we’ll at all times intention to lift costs later – and to a stage that’s decrease – than every other giant provider, and we’ll proceed to maintain our normal costs considerably beneath the worth cap.
