Following Ofgem’s consultation overview; a culmination of five working papers on the proposed cap, legislation passed through Parliament on Wednesday evening.
The Domestic Gas and Electricity (Tariff Cap) Bill will come into effect this winter and is expected to protect 11 million UK households from upsurges to standard variable and default energy tariffs.
The legislation is due to be lifted in 2020, however Ofgem can decide to extend it by up to 12 months on three occasions. The regulator will also review the cap every six months and update it where necessary based on changes to supplier costs.
Yesterday’s news follows the Competition and Markets Authority’s investigation into the market, which concluded that customers supplied by Energy’s ‘Big Six’ are being over charged by an average of £1.14 billion a year.
Prime Minister Teresa May said:
“For far too long, older people, hard-working families and those of low incomes have been subject to rip-off energy tariffs. Our energy price cap will protect households from unfair price rises in time for this winter when people can feel the pinch more acutely.
We know that the cost of living is still a challenge for some families and today marks an important step in helping people to keep more money in their pockets.”