In the UK, energy companies will soon be limited by a cap, which will limit the amount they are able to charge their customers on standard variable tariffs. However, this cap, which is due to take effect on the 1st of January, is now being challenged by one of the biggest suppliers. British Gas, which is owned by the firm Centrica, has started the challenge against the cap.
The company claim that the cap is too low, and is now calling for a review to be carried out. Although, the regulator claims that consultations were carried out and the price cap massively benefits consumers, who, currently, are getting a bad deal in a lot of cases.
Millions of energy customers in the UK are set to benefit from the cap. It’s estimated that it will save, in some cases, up to £76 a year – mostly affecting the lowest income households. And with many families in the UK struggling with their energy bills with winter, the cap has been welcomed.
All of the “Big Six” energy suppliers in the UK have put their prices up this year, and consumers have felt the effects – particularly during the cold, dark winter months. Many consumers have faced bills that are significantly higher this year, which has, consumer groups claim, left millions of families and individuals in fuel poverty.
According to Ofgem, the cap of £1,138 a year is £68 a year below the standard variable tariff offered by British Gas. But, according to Centrica, this is based on wholesale pricing, which has risen steeply this year and is predicted to increase further in 2019. Critics of the cap have warned that it could cost British Gas alone around £70m.
Centrica also argue that, as many energy companies are already facing rising costs themselves, the cap could lead to financial problems for them in the coming years. In a statement, the company said: “Through this action Centrica has no intention to delay implementation of the cap, and does not expect the cap to be deferred in any way.”