Households could save hundreds of pounds on their energy bill by simply switching supplier, with 67 tariffs currently coming in cheaper than the new price cap level, data shows.
Ofgem’s new cap will come into force on Thursday, with the level dropping from £1,126 to £1,042 a year for default tariff customers.
However, customers could still be saving more by switching to a tariff cheaper than the price cap, which places a limit on the maximum price for each unit of energy suppliers can charge domestic energy users.
Of the 67 deals that are currently cheaper than the new price cap, the best value is a standard variable tariff with Outfox the Market and its One Green Flex 4.0 tariff that costs an average of £846 a year, according to comparison site, MoneySupermarket.
Ofgem’s new price cap is due to come into force on 1 October and is lowered to £1,042 a year
The challenger supplier also has the second cheapest tariff – this time a fixed deal – on its Fix’d 20 14.0 offer, costing £854 a year.
Meanwhile, Green Energy has the joint second cheapest tariff on its Maple deal, also costing £854.
Eon is the only Big Six supplier to have one of its tariffs in the best ten deals with its Fix Online Exclusive V50 coming in at £172 cheaper than the cap at £870 per year, with 100 per cent renewable electricity as standard.
As winter is approaching, households are advised to see if they could save money by using a price comparison site and changing supplier.
Alternatively, moving from a default tariff to a fixed one could also save customers hundreds of pounds.
|Tariff name||Average bill value|
|Outfox the Market – One Green Flex 4.0||£846|
|Outfox the Market – Fix’d 20 14.0||£854|
|Green Energy – Maple||£854|
|Utility Point – Just Up 20 Wk39 (only available in 13 regions)||£869|
|Green Energy – Sturgeon||£870|
|E.ON – Fix 1 Year Exclusive September 2020 v2||£870|
|E.ON – Fix Online Exclusive v50||£873|
|Shell Energy – Energy January 2022||£874|
|Green Network Energy – GNE Summer Sizzler v9||£876|
|Pure Planet – 100% Green 12m Fixed September20 v1||£883|
Stephen Murray, energy expert at MoneySupermarket, said: ‘Winter is very much around the corner and we’re expecting higher than normal energy usage this year with more of us working from home as a result of social distancing measures.
‘As a result, if you haven’t switched your energy supplier for a while, you should consider it. This is especially the case if you’re on an expensive standard variable or default tariff as you’re likely to save money as a result.
‘Ofgem signalled its intention to lower its price cap to from £1,126 to £1,042 in August, with the move effective from October. But relying on the price cap to reduce your bills could result in you missing out on hundreds of pounds of savings.
‘Our research shows that there are currently 67 tariffs on the market that are cheaper than the price cap, and some of the best value could save you up to £200.
‘So, if you’re in a position to do so, our strong recommendation is to shop around for a new deal. Switching supplier is easy – it only takes a few minutes online.’
However, analysis of switching data from Energy UK shows that since the energy price cap was introduced in January 2019, the number of households switching energy supplier has fallen.
This is despite the fact that in April 2020 prices for fixed rate deals fell to their lowest level in nearly three years.
The latest switching figures show that nearly half a million customers switched supplier last month.
This is 17 per cent fewer than in August 2019 and brings the total number of switches to nearly four million so far in 2020 – 5 per cent lower than this time last year.
The number of people switching supplier declined since the introduction of the price cap
The energy price cap was introduced by the energy watchdog, Ofgem, in January 2019 as a way of keeping down the cost for households across the UK.
Suppliers are not allowed to charge above the cap but they can offer cheaper deals for savvy customers.
The savings are bigger for prepayment meter customers who will see their bills drop by £95 from £1,164 to £1,069 on 1 October.
The cap will remain in place until April 2021 when the level will be reviewed.
Peter Earl, head of energy at Compare the Market, said: ‘The cap was originally introduced with the worthy goal of preventing energy suppliers from hiking prices unfairly for their more loyal customers and charging them over the odds for their energy.
‘In practice, however, confusion about the price cap could be leading people to pay more for their energy than they ought to.
‘As the long list of tariffs priced cheaper than the cap demonstrates, the new cap is not a good price to pay for energy – far from it.
‘The cap appears to be disincentivising customers from switching provider, which is a concern as switching remains a reliable way for households to save money on their energy bills and lock in an energy tariff that is significantly lower than the £1,042 cap level.
‘With the economic environment still highly uncertain, switching to a fixed-rate tariff is an effective way for people to lower their energy bills during the coming colder months.’
Could you cut your energy bills… or help the planet and go green?
Millions of people could be needlessly overpaying for their energy as they fail to switch to providers who offer cheaper deal.
They may also be missing out on the opportunity to help the planet and fight climate change, by switching to green deals that offer electricity from renewable sources and more environmentally-friendly gas.
With our partner, Compare the Market, you can compare energy tariffs and exclusive deals.
Why not find out if you could save hundreds of pounds a year on your energy or go green?