Energy bills to drop by £84 per year for at least 15 million households after price cap cut

MORE than 15million households will save at least £84 per year as energy companies slash their prices, Ofgem has declared.

The energy watchdog announced yesterday that the price cap on variable tariffs will be cut to £1,042 from Oct 1, its lowest level since it was introduced at the beginning of last year. Those on default tariffs will save £84 a year while pre-payment customers, whose cap has also been reduced, will save £95.

However, industry experts pointed out that customers can save hundreds more by switching supplier as variable tariffs are typically the most expensive offered by firms.

Jonathan Brearley, Ofgem’s chief executive, said: “Millions of households, many of whom face financial hardship due to the Covid-19 crisis, will see big savings on their energy bills this winter when the level of the cap is reduced.

“They can also reduce their energy bills further by shopping around for a better deal. Ofgem will continue to protect consumers in the difficult months ahead as we work with industry and government to build a greener, fairer energy market.” Guy Anker, of Moneysavingexpert.com,

said the cheapest deals on the market were on average £250 a year cheaper than the level of the price cap.

He added: “It’s important this price cut doesn’t lull people into a false sense of security that they’re paying a good price for their energy.”

Victoria Arrington, of switching website Energyhelpline, said: “Lower wholesale energy prices have also increased the number of competitive, fixed tariff deals – meaning now is a particularly good time to consider switching.

“In addition, these deals lock in today’s low price for 12 months or more, protecting customers from any potential future price rises.”

The level of the cap follows the underlying cost of energy, and Ofgem said the reduction was due to a sharp decrease in wholesale gas prices since the cap was last updated in February.