The Government’s Domestic Gas and Electricity (Tariff Cap) Act became law on 19 July 2018. Following consultation, Ofgem set the initial cap at £1,137 per annum for a typical default tariff, dual fuel single rate customer, paying by direct debit and using a ‘typical amount’ of energy annually. The level of the cap has to be updated each April and October to reflect the latest estimated costs of supplying electricity and gas, including wholesale energy costs.
As from April 2019, the cap will rise by £117 per annum to take account of rising wholesale costs. Ofgem analysis found that despite the increase,
default tariff customers could be paying around £75 to £100 a year more on average for their energy had the default tariff cap not been introduced.