Lower energy price cap kicks in, but customers are still being ripped off
The maximum price for a typical dual fuel customer on a standard variable tariff will fall from £1,254 a year to £1,179.
However, most people on their supplier’s standard tariff will still be paying over the odds for their energy.
Lily Green, head of research at autoswitching service Look After My Bills, said: “The truth is that there are around 200 better tariffs available, the cheapest of which is £300 cheaper than the cap.
“Switching is key to making real savings on your bills.”
The energy price cap was first introduced by Ofgem at the start of this year to give customers on pricey standard or default tariffs a better deal.
It is updated every April and October to take into account the varying costs of wholesale energy.
The cap is a maximum price, with most suppliers choosing to set their tariff prices around the absolute limit.
All of the Big Six suppliers have announced that they will be pricing within a few pounds of the cap, which they have done with every price cap review.
British Gas, Eon and EDF Energy have dropped the price of their average standard tariff from £1,254 to £1,177 from today, while npower, Scottish Power and SSE have cut their tariffs to £1,178.
Overall, 40 energy companies will have to cut the price of their standard variable tariffs from today, according to Look After My Bills.
However, households could save £253 on average by switching from a standard variable or default tariff to the most competitive fixed or variable rate tariffs.
Peter Earl, head of energy at Compare The Market, said: “People should not see the price cap as a blessing or a safeguard – rather, merely a cap on the absolute amount of money they should be paying for their energy.
“The cap has done little to encourage people to switch, but instead may have switched people off, as they believe they are being protected.
“A key point which has been largely overlooked is that the price protection provided by this latest cap level change is only in place for six months, after which it will likely change again based on variations in wholesale prices.”
He added: “People who have opted to switch since the price cap was originally introduced back in January have saved hundreds of pounds on their annual energy bills in comparison to those that haven’t.”