Will your energy bills fall by £95 as 15million homes set to benefit from price cap

MILLIONS of households will see energy bills fall by up to £95 a year in October as a cap on prices is set to be slashed.

Prepayment meter customers will see bills fall by £95 a year while those on default energy deals will benefit from an £84 a year cut in costs.

The maximum providers will be able to charge default bill payers for energy this winter will be set at its lowest ever level at £1,042, down from the current cap of £1,126.

For prepayment meter customers, the cap will be set at £1,070 a year, down from from £1,164.

Regulator Ofgem says this it will ensure 15million households continue to pay a fair price for their energy.

Around 11million of these customers are on default tariffs and 4million on prepayment metres, which Ofgem says together equates to almost half of the population.

Despite millions of households set to benefit, they can actually save hundreds more by switching supplier.

How much you pay for energy depends on your supplier, where you live, and how much gas and electricity you use.

But taking a typical household, those on prepayment meters could save £182 a year by swapping to a deal with Omni Energy - currently the cheapest tariff on the market.

Alternatively, they can save £167 annually by switching to People's Energy, or £166 to a deal with Bulb.

Meanwhile, a typical household on a default tariff paying the current cap will save £315.66 by swapping to a one-year fixed deal with Avro Energy that costs £810.34.

Switching to a deal with Outfox the Market will save you £305.57 a year, or a deal with Robin Hood Energy will save you £305.41 annually.

The price cuts have been driven by lower wholesale costs - the price energy providers pay for energy - following the coronavirus pandemic, when in June costs hit a 20-year low.

Energy wholesale prices as much as halved but the savings weren't passed onto customers because the price cap is only revised twice a year - in October and April.

But the regulator warned that if wholesale costs rise as lockdown is eased, the cap is likely to go up again in April 2021.

Richard Neudegg, head of regulation at comparison site Uswitch said the delay in passing on the benefits of a drop in wholesale cost is "an unavoidable fallout of the price cap system".

The price cap was introduced by Theresa May back in January last year and was initially set at £1,137.

But just three months later it rose by another £117 causing the Big Six suppliers - British Gas, EDF Energy, EON, Npower, Scottish Power and SSE - to hike their prices to the limit.

They were even accused of running a cartel by charging very similar prices.

Ofgem chief executive Jonathan Brearley said: "Millions of households, many of whom face financial hardship due to the Covid-19 crisis, will see big savings on their energy bills this winter when the level of the cap is reduced."

Mr Neudegg added: "Customers can choose to stay on their energy deal and wait until October to see the cut, or they can reap the benefits of these low wholesale prices today by switching."

Minster of state for Business, Energy and Clean Growth, Kwasi Kwarteng, said: "We are working hard to ensure consumers pay a fair price for their energy, with today’s announcement putting almost £100 back in the pockets of 15 million households.

"This follows the dedicated support we secured with energy companies during the pandemic for the most vulnerable customers, and a new £2billion Green Homes Grant scheme to help households become warmer and their bills cheaper this winter"