The UK Government is tabling a bill to cap energy prices
But what does this mean and will it help struggling consumers?
At the UK Prime Minister Theresa May’s much talked-about speech last week, she mentioned plans to introduce a price cap on energy prices.
The cap could have a detrimental effect
Already, draft legislation - designed to place a temporary cap on energy prices - is ready to go to Parliament. If passed, the legislation would limit the cost of standard variable tariffs and other default tariffs that customers are moved onto at the end of a fixed-term deal.
It’s an interesting move, and one that has been widely covered in the UK press. Initial coverage seemed to praise the idea, but industry experts have said that the cap could actually have a detrimental effect.
The reason for this is that it’s possible it could dampen competition and reduce the number of highly discounted deals on the market as suppliers attempt to recoup some margins.
There are also fears that - if customers know there’s a cap - they’ll be less likely to feel the need to switch. And, although the cap is likely to save an average user around £100 per year, they could save even more by moving to a new supplier.
Energy market news in Ireland
There hasn’t been any talk of a similar cap in Ireland just yet - with deregulation being so recent, and competition in the energy market strong, it would seem like a backwards step.
These include a rule whereby suppliers will have to prompt all customers, on an annual basis, who have remained on the same tariff for 3 years or more. This prompt will continue to issue every 12 months until that customer has changed tariff.
In the same way that insurance renewals prompt people to shop around for a better quote, this annual prompt should remind customers to look for a new deal.
But you don’t have to wait to receive the prompt before you shop around. At the moment, customers can save up to €378 by switching from typical standard gas and electricity tariffs to the cheapest deals on the market, and switching only takes a few minutes.