GUIDE TO COSTS THAT ‘WILL SAVE £76 A YEAR’

A PRICE cap on standard variable, or default, energy tariffs was introduced by the Government on January 1.

These tariffs are often among the worst value energy deals and about 11 million households

(54 per cent) are on them.

The cap is on the cost of each unit of energy that a household uses, rather than on the actual bill. So the more energy you use, the higher your bill will be, as now.

The cap is currently set at £1,137 per year (for an average user), which energy regulator Ofgem says will save households an average of £76 per year. Ofgem monitors the cost of buying and supplying gas and electricity and will review the cap twice a year.

In early February Ofgem will announce the new level of the cap, which will take effect from April 1. In early August Ofgem will announce the new level of the cap, which will take effect from October 1.

However, with wholesale prices having continued to increase over the past six months, it is expected that Ofgem will raise the level of the cap substantially in February and that energy suppliers will raise their tariffs in line with the level of this cap, wiping out any initial savings which may have been made.

A capped deal does not mean it is a good deal and there are plenty of energy plans available for consumers to switch to which are up to £150 cheaper than the current cap.