Plans have been announced that aim to bring in a cap to energy prices, but what does this mean?
The draft legislation outlines how energy regulator Ofgem will gain power to cap tariffs known as 'Standard Variable Tariffs'. Unlike a fixed rate tariff, variable plans allow for prices to rise, and fall, depending on the changing market rates.
There are currently around 12 million households on a variable tariffs, and while it can work to your benefit when prices drop, there are currently no restrictions in place as to when these prices rise and you could face paying some very large bills.
Experts say that it is unlikely this price cap will come into force before the winter, but it is currently slated to last until 2020. Ofgem will also have the capability to extend it until 2023 if it decides this is necessary.
This cap won't affect all tariffs; pre-payment meters and green tariffs are exempt.
Julian Morgan, managing director of price comparison service Energy Advice Line, commented, "We're interested to see these caps come into place, and find out how it's going to properly affect the market. It's hard to say at this point in time how companies are going to react, but the chances are that the rates for these tariffs are most likely going to rise.
"The only way to get the best price for your energy, and save money along the way, is to check the market and see what options suit your usage - don't move to a capped tariff just because you think it's the right thing to do."
Energy Advice Line provides a free, no obligation quoting service that allows your business to check out the latest rates on the market and find the best price for your needs. Head to energyadviceline.org.uk to find out more and start saving today.