Energy prices will NOT be capped at £1,137yr, says Martin Lewis

Ofgem has this morning finalised its plans for a price cap, with all standard variable and 'default fixed' tariffs to be capped from 1^st January 2019.

Martin Lewis, founder of MoneySavingExpert.com, said: "The energy price cap which is being launched is misnamed, it is not a cap on the price you pay, it’s a cap on the rate that will be charged.

"This is important, even some BBC bulletins were today reporting that the price cap will be set at £1,137/yr and that is the maximum anyone will pay - that is simply untrue.

"The cap depends on your usage, the £1,137 figure is a nominal figure based on what the cap would be for someone with typical usage, if you have higher usage your cap will be higher, if you have lower usage your cap will be lower.

"The misleading coverage of the price cap has led many higher users to wrongly think that they’re about to get a very substantial reduction in their bill, that is not true. For most people who are on standard tariffs, the energy cap is likely to reduce their bills by around 10% at most.

"It should also be noted that it’s only for the short term. As expected in its press release today, Ofgem has flagged that from April, when it renews the price cap due to the large lift in wholesale price, the price cap is likely to be raised substantially.

"Altogether the message is the same now as it has always been, do not simply sit on your hands, do not simply rip yourself off by sitting with your energy provider’s standard tariff  - you are being fined for apathy.

"Make sure you’ve got the cheapest tariff on the market, many people can still cut their bills by hundreds of pounds below the price cap, by moving to a cheaper tariff."

Here is a link to Martin’s tweet on the subject - some of the replies show the confusion.