Energy bills too high for half of households, says watchdog

NEARLY half of all households are paying too much for their energy and could save thousands of pounds in minutes.

They are out of pocket because they have never switched their provider, according to Ofgem.

The energy watchdog says those people who have switched recently could also be paying too much – and it is all down to something called default tariffs.

Default tariff is the price of electricity and gas you pay when your fixed deal comes to an end. It is usually more expensive because it does not apply any of the savings and deals energy firms offer.

There are a number of energy companies in the market and because of the competition the cheapest tariff offered by the companies can be as much as £245 a year less than the default tariff.

According Ofgem: “Consumers are often automatically put on default deals, usually standard variable tariffs, when they come to end of fixed terms contract deals, with default deals typically more expensive.

“The solution is to switch energy suppliers regularly to always be on the cheapest tariff.”

Luckily more help is on its way.

Ofgem has announced it is setting a price cap on default tariffs from early next year.

It says over 11m households will get lower bills because they are paying more than the proposed cap of £1,136 a year.

The cap will save customers on average £75 a year, but those who are on the most expensive tariffs will save as much as £120.

Dermot Nolan, chief executive of Ofgem, said: “Once the price cap is in place, all households in Great Britain covered by the cap will be protected from being overcharged for their energy.”