Chart of the week | A tariff cap is not a price freeze

The final confirmation of the default tariff cap on 6 November has caused a good deal of commotion. Most notably the announcement from SSE and npower that the cap is a key factor in renegotiating their merger. But, the price cap that will apply from 1 January is just over £1 different from Ofgem’s initial proposition.

In this week’s Chart of the week, we look at what this small net change indicates. The provision for costs associated with the direct debit payment method was reduced by £11 for dual fuel customers. This is as a result of evidence submitted by suppliers.

In contrast, there is a £9 smart metering increase for dual fuel customers. While this may be welcome, many suppliers would argue that the cost of the smart meter roll-out is still underestimated.

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