Plummeting wholesale energy costs mean you could be paying £182 extra a year due to energy price cap
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MILLIONS of households may be paying an extra £182 a year for energy bills after wholesale prices "plummet"- and suppliers haven't passed the savings on to bill payers.
A price cap introduced by the watchdog Ofgem limits the amount companies can charge for gas and electricity to stop customers on standard variable rate tariffs paying over the odds.
But a hike in April saw the cap rise by £117 a year - or 10 per cent - to £1,254 for SVRs and £106 to £1,242 annually for those who use pre-payment metres to combat rising wholesale costs.
The new figures were based on the average cost of energy between August 1 2018 and January 31 2019 which was was a huge £61.15.
That's a whopping 14.5 per cent more than the £52.26 wholesale prices suppliers paid at the end of May, according to market analysis by ICIS Power Index (IPI).
If suppliers passed the full savings on to customers on SVR tariffs then bills should drop to £181.83 but instead, most continue to charge the limit.
How to switch suppliers and save
SWITCHING suppliers is the best way you can cut your energy bills. Here's what you need to do.
1. Shop around - If you're on an expensive Standard Variable Tariff (SVT) deal you are throwing away up to £300 a year. Use a comparison site like MoneySuperMarket.com or EnergyHelpline.com to see what best deals are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount usually for 12 months.
2. Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information to hand - which you can find on your bill - to give the new supplier:
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
For more advice read our guide on how to switch.
Some smaller suppliers have lowered prices, such as Igloo Energy, which cut tariffs by 3.5 per cent yesterday to £932.43.
But experts are calling for the cap to be lowered during August's review process that determines any changes that will come into effect from October 1.
Until then, customers will have to foot the bill.
Ofgem's cap has already faced criticism for hiking prices just three months after it was first introduced.
The Big Six energy firms have also been accused of "running a cartel" after they all hikes prices to the same amount.
But many feel that you can save more by switching suppliers and signing up to a fixed rate deal.
Tariffs can vary depending on where you live and how much energy you use to it's important to look around to find the best deal for you.
Energy expert Rik Smith, from comparison site , told The Sun: "Despite wholesale costs being at their lowest level in months, standard variable tariffs remain sky-high and are some of the worst value deals on the market.
"The cheapest fixed deal available today is now £381 less than the price cap, so there are huge savings to be made by switching supplier.
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"Now is the time to take action and show suppliers that you won’t be taken for granted. Locking yourself into a fixed deal will also protect you from any further price rises and ensure you’re getting a good deal for your energy."
Ofgem reviews the price cap every six months so that it can adjust it to reflect wholesale energy costs.
MoneySavingExpert Martin Lewis reckons swapping to green energy could save you £300 a year.
An Ofgem spokesperson said: "Suppliers purchase energy in advance, so the cost of energy delivered to customers in this price cap period (April to October 2019) reflects the prices that were offered between August 2018 to January 2019."
They added that the August review of the price cap will ensure that customers are paying a "fair price" for their winter bills.
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