You are here: Home - Household Bills - News -

Gap between cheapest energy deals and price cap plummets to lowest ever level

0
Written by:
18/10/2021
Switching energy tariff was once a sure-fire way to save some cash, but not anymore.

That’s according to new research showing the gap between the cheapest energy deals and the energy price cap has plummeted to its lowest ever level.

The regulator’s price cap limits the amount suppliers can charge households on standard and default tariffs, which were typically among the most expensive deals on the market.

At the start of October, Ofgem increased the price cap from £1,138 a year to £1,277 for a typical dual-fuel household.

But due to soaring wholesale prices and the resulting energy crisis, price capped tariffs are now some of the cheapest options.

Analysis by Cornwall Insight shows the difference between the ten cheapest tariffs and the current default tariff cap stands at just £11 a year, compared to £291 a year in September 2020.

This is the lowest level this gap has fallen to since the introduction of the price cap in January 2019.

James Mabey, analyst at Cornwall Insight, said the reduction in potential savings for customers has caused the level of customer switching to “reduce significantly”

“Usually, a rise in the default tariff cap by Ofgem would widen the gap between the cap and the lowest deals making switching more worthwhile. However, with wholesale prices remaining well above typical levels, it is not clear that the savings gap will reopen,” he said.

“This is compounded by the fact that many tariffs have been removed from the market.

“The drastic reduction in the number of tariffs available, along with a handful of suppliers stopping customer onboarding completely, suggests that the domestic switching landscape will retain a low level of switching until the gap between delivered costs falls below the price cap once more.

“This will either be when the price cap is amended in April next year or the current highs in the wholesale market abate.”

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week