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Energy bills in Great Britain rise by 5% as price cap increases
(www.theguardian.com)
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this post was submitted on 01 Jan 2024
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What's the point of a price cap if it keeps increasing
It prevents surprise bills. You know the maximum you’ll pay for the next 3 months.
So we get surprised every three months rather than every month.
That wasn't the original intent of the measure though afaik, it was to regulate third parties so they don't overcharge. Yet here we are, utilities companies charging ever higher prices and also reporting ever higher profits.
It doesn't. It increases when the market price increases, it decreases when the market price falls.
The point of the price cap isn't to be some sort of subsidy of consumer energy costs - though the government did some separate stuff along those lines with the energy price guarantee (which capped the typical household's energy bill at £2,500 for the period it was relevant) or the support scheme in winter 2022 when the taxpayer paid everyone £400. The price cap is now below the energy price guarantee so the subsidies are no longer relevant.
The price cap is just a way of giving people who chose to be on variable tariffs a little bit of predictability of what they'll be paying for energy three months ahead when the market prices are moving around.