Energy regulator Ofgem has reduced its energy price cap by £75, but you could save even more by shopping around for even lower tariffs – some more than £300 lower.
Ofgem announced the reduction will start from October 1st, lowering the maximum payable from £1,254 to £1,179, made possible by lower wholesale gas prices.
The cap was launched in January by Theresa May when she was Prime Minister and was originally designed to save dual fuel consumers being ripped off by their suppliers
She said at the time: “Our energy price cap will cut bills for millions of families and people across the UK who have been ripped off by energy companies for far too long.
From today, money will go straight back into the pockets of loyal consumers, including the elderly and those on lower incomes who feel the pinch more acutely.”
Part of the capping plan included additional reviews to see if the price could be dropped even lower which has allowed Ofgem to make its second cut in a year for 11 million default tariff customers.
It further announced falls of £25 a year for 4 million pre-payment meter customers.
In a statement the regulator said that wholesale energy prices fell significantly between February and June 2019 through a combination of low demand during the winter, strong gas supply and relatively healthy storage levels.
Chief executive Dermot Nolan said: “The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.
Reduction in cost
“This means the energy bills of around 15 million customers on default deals or pre-payment meters will fall this winter to reflect the reduction in cost of the wholesale energy.
“These customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it.”
But he also admitted even bigger savings could be made if consumers are prepared to shop around and switch supplier.
He said: “Households can cut their bills further in time for winter and we would encourage all customers to shop around to get themselves the best deal possible for their energy.”
Consumer groups have pointed out from the start of the process that better deals available for anyone prepared to shop around.
Which? spokeswoman Alex Neill said she feared people would be lulled into a false sense of security by the cap and urged them to consider switching, saying: “Which? research has previously found that the cap won’t cut bills for customers on three in ten dual-fuel deals.”
The warning was echoed by Citizen’s Advice chief executive Gillian Guy who said: “The introduction of this cap will put an end to suppliers exploiting loyal customers. However, while people on default tariffs should now be paying a fairer price for their energy, they will still be better off if they shop around.
“People can also make longer-term savings by improving the energy efficiency of their homes. Simple steps, such as better insulation or heating controls, are a good place to start.”
The cheapest variable rate currently available comes from Outfox The Market with a dual fuel charge of £846 a year – a £333 saving on the new capped charge.
Anyone on a pre-payment meter could cut their annual bill by £317 on the £900 deal offered by Nabuh Energy.