What is the energy price cap?
Last November, Ofgem announced an energy price cap that is intended to put a ceiling on gas and electricity bills for over 11 million customers on standard variable rate (SVR) or ‘default’ tariffs (what you’re put on when your existing deal ends). There is a separate cap for those with prepayment meters.
The main cap currently stands at £1,274 (£1,242 for prepayment tariffs). Following the latest review, it will fall to £1,179 (£1,217) on 1 October, 2019.
The cap is the maximum that energy companies can charge a typical household with an SVR tariff. All the major energy providers set their prices at the maximum allowed by the cap.
There are many fixed-rate tariffs priced substantially below the level of the cap, and they will remain cheaper even when the cap is reduced in October.
This means you can save even more money by switching your tariff to a better deal and switching again when that deal ends.
The cap will be reviewed over the winter and updated again in April 2020.
How will the price cap review affect my energy bill?
MoneySuperMarket’s own research shows that the new cap of £1,179 is still higher than the top 100 cheapest tariffs on the market, as a result of falling wholesale costs, lower rates of inflation and lower smart meter costs. It is also £259 higher than the average of the 20 best deals on the market (£1,021) and £258 more than the cheapest tariff on the market.*
*Based on Ofgem average bill values in July 2019
“Crucially, there are more than 100 cheaper tariffs available to consumers in the market today,” explains Stephen Murray, MoneySuperMarket’s resident energy expert.
“That means someone switching today could secure a deal that delivers three times the saving the price cap offers, while protecting themselves from this rollercoaster of price fluctuations every six months. It's a no-brainer.”
Why should I switch energy suppliers?
The easiest way to bring your bills down is by switching supplier. In fact you could save at least £243.67* on your bills.
All you need to do is tell us a little about yourself, your home and your current usage figures, which will help your new supplier calculate a more accurate bill than using estimates. Then you’ll be able to compare quotes from providers across the market, from the Big Six to smaller companies as well as green energy suppliers.
Once you’ve found the deal you want, click through to the provider’s website to finalise your purchase and start saving.
Thanks to the Energy Swicth Guarentee, your new provider will take care of all the details, your service won’t be interrupted, and you should be on your new tariff within 21 days.
What’s more, if you sign up to the MoneySuperMarket app, you’ll receive alerts when you’re able to switch and save at least £50 on your bill.
*51% of customers who applied to switch via MoneySuperMarket could save at least £243.67, according to figures from May 2019.