Energy users on standard variable rate (SVRs) tariffs will see their annual payments capped from the end of the year.
The market regulator, Ofgem, says typical dual fuel (gas and electricity) users paying by direct debit stand to save £75 a year once SVRs are capped at £1,136 a year. Those on more expensive tariffs could save up to £120 a year.
Around 11 million households are on SVR tariffs. They have either been on the same tariff since the energy market was privatised in the 1980s, or they have moved onto an SVR after a fixed-term deal came to an end.
Politicians and consumer groups have lobbied hard for some form of price controls on energy tariffs because providers have pushed through inflation-busting price hikes on SVRs in recent years.
But we argue that, rather than wait for the cap to come into effect and deliver a typical saving of £75 a year, customers with SVRs should instead switch to a fixed rate deal - today.
There are around 100 fixed rate tariffs that cost less than the proposed £1,136 price cap. In fact, typical users can save £250* a year or more by switching away from an SVR with a ‘Big Six’ provider to a fixed rate deal with another firm.
Painful price hikes
This has been a painful year for energy customers, with multiple price hikes. But these increases affect households on SVRs - those on fixed rate deals have seen no change in what they pay. Their rate is locked in for the duration of the deal.
So the message is clear: if you’re on an SVR, don’t wait for the cap. Switch and fix today to save even more.
Stephen Murray, our energy expert, says: “You might think Christmas has come early with the savings mooted in the Ofgem announcement of the price cap level, but you’d be missing the bigger picture.
“Switching today could save you £250 or more, and there’s no need to wait for a price cap that would actually save you on average £75.
“It’s also worth noting the price cap can easily go up as well as down, so those savings aren’t even guaranteed. So don’t get lulled into a false sense of security by the political soundbites – the easiest way to bring down your bills is to go online and switch now to a competitive fixed rate tariff.”
It only takes a matter of minutes to run an energy quotation on our site, and a few minutes more to actually start the ball rolling.
Your switch should be complete within 21 days, with your new provider handling all the admin. You’ll just need to send a closing meter reading to your old and new providers.
There’ll be no need for work inside or outside your property - you’ll get the same gas and electricity through the same pipes and wires. And there’ll be no interruption to your supply at any stage.
*Based on the average saving for customers that applied to switch via MoneySuperMarket, March 2018