Energy price cap falls by 6%
The maximum price for a unit of gas or electricity has fallen, but more than half of UK households could still save money by switching, warns Ofgem.
The energy default tariff price cap is a limit on how much customers on a default tariff pay for each unit of energy.
On 1 October 2019 the price cap was cut by £75 per year.
Great news – or is it? We highlight the price cap confusion.
Default price cap reduced on 1 October
In August 2019, the energy regulator Ofgem announced the latest energy price cap coming into force on 1 October.
For the first time since its introduction in January 2019, the default tariff price cap actually went down.
This will save the average household £75 per year if they're on their supplier’s default tariff, also known as a standard variable tariff (SVT).
So brilliant news for consumers just before the high-usage winter months?
Well, not quite. The level of the energy cap now stands at £1,179 per year.
This is the maximum that the energy companies are able to charge an average household with an average energy usage (3,100 kWh a year for electricity and 12,000 kWh a year for gas).
Read more: Energy price cap explained
The Big Six respond
As of October all of the Big Six energy companies set their SVTs at or around the cap limit.
At the time of writing, E.ON, EDF, Npower and SSE have all set their SVTs at the limit of £1,179, while Scottish Power and British Gas have set their prices just below this at £1,178 and £1,177 respectively.
You might think, “So what? My price has fallen so I’m getting cheaper gas and electricity”.
The problem is that this price is the maximum that they (or any company) can charge.
You're literally buying the most expensive energy available – your energy company is relying on your lack of interest or ability to switch to a cheaper tariff and charging you for the privilege.
This means there are a lot of other companies who would charge you less.
Read more: How to beat energy price rises
50% of households could save
In fact, there are many companies and tariffs available that could save you money. And even the Big Six have more than one tariff – they just like to keep you on their most expensive one if you don’t do anything.
So, by switching tariff you could save money without even changing your supplier.
Confused.com’s head of energy, Tom Vaughan, said:
“The energy price cap coming down is great news for the 50% of British households who are languishing on their energy supplier's default tariffs.
“However, as an industry we need to make these customers aware that they can potentially save hundreds of pounds by spending five minutes doing an energy comparison.
It’s so easy to switch these days, as energy companies have had to sort out their act and guarantee to switch customers quickly, easily and without disruption.
There really is no reason to pay anything close to the energy price cap in the current market.”