Cheap energy deals fall by 90% ahead of price cap
Only eight tariffs are currently available which cost less than £1,000 per year, analysis from the consumer group has shown. This compares to 77 tariffs which were available at the beginning of the year.
Which? says this lends weight to concerns that energy suppliers may reduce the number of cheap deals on the market to make up for the money they might lose on their more expensive default tariffs after the cap comes into action on 1 January.
The cap will be set at £1,137 per year for a medium domestic dual-fuel customer paying by direct debit. Regulator Ofgem estimates that it will save households £75 a year on average, although it will only apply to default tariffs rather than fixed deals.
The price cap will be introduced with the intention of reducing the amount households pay for their energy, particularly to the Big Six. However, there are concerns that it will mean there are less deals around and consumers may become less likely to shop around.
For example, Ofgem predicts that the price cap will reduce the number of consumers who switch provider or tariff by 50%.
“The price cap is supposed to help consumers, so it is a real cause for concern that some of the best-value deals seem to have disappeared from the market just as it is introduced,” Alex Neill, Which? managing director of home products and services, said.
“This demonstrates why the cap can only be a temporary fix – what is now needed is real reform to promote competition, innovation and improved customer service in the broken energy market,” he added.