Price cap? Don’t rely on it
More than half of energy deals on the market are cheaper than the price cap newly introduced by the Government. Of the 279 fixed-rate energy deals currently being offered, 60pc would work out cheaper than the new limit on prices, according to switching website Comparethemarket.com.
Introduced on Tuesday, the rule limits bills at £1,137 a year for a household with average consumption – but the majority of consumers would still be better off switching supplier.
The cheapest deal on the market is Utility Point’s Up Energy Saver tariff at £903 a year, £234 cheaper than the cap. The average consumer who switches supplier pays £921 a year.
Peter Earl, from the website, said: “This is a reminder that the price cap will not solve the underlying issue – millions of people stuck on standard and default tariffs will still be overpaying for their energy.”
The cap applies to the default tariffs paid by customers when any fixed- rate deals end. These tariffs are notoriously bad value for money and the Government estimates its cap will help 11 million households that are loyal to their supplier.
But there is concern that the cap could lull consumers into a false sense of security and reduce the number who switch. Energy regulator Ofgem’s impact assessments suggest the number of people who move suppliers could reduce by a third.
The cap is a temporary measure while further work is done to make the energy industry fairer. It will be in place until at least the end of 2020 and can be increased every six months, but only in line with actual cost increases for suppliers.
Launching the cap, Claire Perry, the energy minister, said: “Switching is still the best way to find a better deal, but that doesn’t mean customers should be punished for their loyalty.”