Ofgem lowers price cap slashing energy bills for 11million households by £75 a year – but you can save £333 by switching
MILLIONS of households will save £75 a year on their energy bills after Ofgem announced it has slashed the price cap by £75.
The regulator has lowered the maximum price suppliers can charge for electricity and gas from £1,254 to £1,179.
The cap will help 11million households on standard variable tariffs (SVR) cut the cost of their bills .
As a result, around 41 suppliers will now have to lower prices, according to auto switching service Look After My Bills.
The four million people who pay for their energy on a pre-payment metre are also set to benefit as the cap has dropped by £25, from £1,242 to £1,217.
But bill payers will have to wait until October 1 before feeling the benefit, and even then the savings will be smaller as firms spread the cost over the year.
Ofgem has put the cut down to plummeting wholesale costs between February and June, something The Sun revealed two months ago but the savings weren't passed onto consumers.
The price cap was introduced by Theresa may back in January last year and 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 SVR prices to the limit.
They were even accused of running cartel by charging very similar prices.
Dermot Nolan, chief executive of Ofgem, said that "customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it."
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Last month, the Competitions and Markets Authority changed the way the cap is calculated for people using pre-payment metres to "fully reflect the higher cost" of providing energy this way.
It means that the price cap savings are smaller, leaving low-income families using the metres to make their cash stretch further.
Richard Neudegg from comparison site uSwitch said: "Those who are often least able to afford their bills [and on pre-payment metres] are getting less of a cut, and will actually end up paying more per year than households with credit meters.
"This highlights that a blanket cap is not the best way to help those most in need, and that those people would benefit from more targeted protection."
While millions of households are set to benefit from the cap, they could save even more by switching supplier.
How to find a cheaper energy deal
FIRSTLY, you’ll need to have a recent bill to hand. This will have all the details you need, including the name of your tariff and your recent spending on gas
- Use a comparison website: Customers can use websites such as uSwitch.com or Energyhelpline.com to compare tariffs and find a cheaper deal. You could save up to £400 a year if you’ve never switched before.
- There are other service you can turn to: MoneySavingExpert’s Cheap Energy Club will let you set up an email reminder that alerts you when cheaper deals become available.
- Things to do before you switch: Compare prices and before you switch check to see if you can get cachback from a website like Quidco or TopCashback
The cheapest variable rate deal on the market is currently by green energy provider Outfox the Market, which charges £846 - an annual saving of £333 compared to the price cap charges.
If you're on a pre-payment metre, you can cut bills by £317 a year if you switch to the cheapest fixed rate deal offered by Nabuh Energy, that costs £900.
Research by Look After My Bills released earlier this week revealed how the gap between the cheapest and most expensive energy tariff has got worse since the price cap was introduced.
Lily Green, from Look After My Bills says: "The price drop should have come a lot sooner. The cap was set too high for too long.
"Our own research found that the price cap had in fact made the loyalty penalty worse.
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"The sad truth is you can’t trust suppliers to lower your energy bill."
Matthew Vickers, from the Energy Ombudsman advises customers to read online reviews before locking into a deal with a new provider.
He said: "A good price doesn’t necessarily mean good value. Researching customer service as well as price will enable a consumer to make an informed decision about switching."
Energy and Clean Growth Minister Kwasi Kwarteng said: "The increased competition in the UK energy market facilitated by the energy price cap has enabled more suppliers than ever before to enter the market, driving the innovation and value that we all want to see."
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