Energy cap extended to 1m vulnerable households but prices to rise from April

7 February 2018

Almost one million vulnerable households have had their energy bills capped by the regulator’s so-called ‘safeguard tariff’, but this is set to rise from April.

According to Ofgem, the safeguard tariff stops suppliers from charging customers too much and ensures any price increase is justified by rises in underlying costs. 

From 2 February, one million vulnerable households – as determined by those who receive the warm home discount – were included in the safeguard tariff, saving an average of £115 per year per household in the process.

They join the four million pre-payment customers whose bills have been limited to the safeguard tariff price since April 2017.

But the level of the cap, which is adjusted twice a year, is to rise from 1 April by approximately £57, taking the average annual dual fuel bill from £1,031 to £1,089.

Ofgem blames the increase on higher wholesale energy costs and policy costs to support low carbon forms of electricity generation.

The price rise means those one million households who became protected by the tariff this month will see annual savings fall by £66 from 1 April. However, Ofgem says the tariff is still cheaper than prices on the open market. When Ofgem introduced the safeguard tariff for prepayment meter customers in April last year, their bills fell by around £60.

Dermot Nolan, chief executive of Ofgem, comments: "Protecting vulnerable customers is a priority for Ofgem. That's why we have extended the prepayment safeguard tariff to almost one million vulnerable households, which will help deliver a fairer, smarter and more competitive market for all consumers.

"Even when energy costs rise, people on the worst deals are better off under the safeguard tariff as they can be sure that they are not overpaying for their energy and any rise is justified.”

Visit Moneywise’s {Energy and water section} for more of the latest news and money saving guidance.  

Add new comment