How does the energy price cap work?
The energy price cap works by setting a limit on the maximum amount suppliers can charge for each unit of gas and electricity.
Ofgem sets a maximum daily standing charge which is what households have to pay in order to have their home connected to the National Grid.
The energy price cap only applies to providers’ standard and default tariffs.
This means if you’re on a fixed-term energy deal, the cap doesn’t apply to you.
Over six million households are currently on a fixed energy tariff, and could end up paying more than the Energy Price Guarantee cap due to the way the discount would be applied.
So far, British Gas, EDF, Octopus Energy and Ovo Energy have confirmed that none of their customers on fixed tariffs will be hit by this loophole.
The new rules mean that customers on expensive fixed deals can simply move on to the cheaper standard variable tariff, which is protected by the Energy Price Guarantee, free of charge.
So you should keep an eye out on emails and text messages if you haven’t receoved an update from your supplier yet.
