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Price Caps Result in Higher Prices for Consumers

Man noting down readings from gas and electricity meters

Martin Bishop / Easy News /

There seems to be a pattern emerging. Every time a story comes out about how big companies and the government are going to "help" consumers save money, we dig into the facts, find we disagree entirely with what's being said, and conclude that it's all a big, fat con.

We don't like to say we told you so - we really don't - but we are rarely wrong when it comes to finding the holes in stories about saving people money.

A perfect example is the truth behind the energy price cap that came into force just fourteen days ago.

Ofgem set a price cap of £1,137 to stop consumers being overcharged and to prevent energy companies from making excessive profits. We knew all along that the energy companies would find "ways and means" around it - and guess what? That's exactly what they've done. An auto-switching service has found nearly 70 "offers" that cost more than the cap. The big energy companies have found a way around it, and it's consumers who will suffer, yet again.

It's a particularly bitter pill for consumers who followed the advice to lock into a fixed deal, as many of them are now paying more than the cap that was supposed to save them money. (It's worth noting that the cap only applies to standard variable tariffs, not fixed deals.) We have also noticed that the cost of leaving a deal has gone up, which suggests the energy companies plan to make money from people who want to get out of an expensive agreement.

Big companies like these will always find a way to take advantage of consumers wherever they can, which is why, whenever you hear about a new price cap, you should take it with a pinch of salt.

Do your own research and find the best deal yourself. When it comes to money, trust no one but yourself.

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