Government’s energy price cap takes force today – here’s what it means for your bills
HOUSEHOLDS could save up to £120 a year on their energy bills thanks to a price cap, which takes force today. But experts warn that you could save more by switching.
The cap, which the Government has introduced alongside energy regulator Ofgem, limits the price you can be charged per kWH of electricity and gas.
In reality, this means bills for the average user paying by direct debit will be capped at about £1,137 per year.
Ofgem says this will save the average household around £76 a year, with a typical customer on the most expensive tariff saving about £120.
The cap, which is due to stay in place until 2023, will be updated by Ofgem every six months to reflect the latest estimated costs to supply gas and electricity.
It follows a similar cap, which was set in 2017, for prepayment meter customers.
But many experts say that while the cap will save some households cash, you're likely to save far more by switching - especially if you're on a pricey default tariff.
Gillian Guy, chief executive of Citizens Advice, said: “The introduction of this cap will put an end to suppliers exploiting loyal customers.
"But while people on default tariffs should now be paying a fairer price for their energy, they will still be better off if they shop around."
Peter Earl, head of energy, at comparison website CompareTheMarket.com, added: “We remain concerned that the price cap will create a false sense of saving and protection.
"More worrying perhaps is that it will also encourage inertia.
"The reality is that shopping around and moving to the best fixed price deal remains the best and only effective way of making significant savings and keeping your bills low."
Alex Neill, managing director of home products and services, at consumer group Which?, also points out that Ofgem needs to closely monitor whether the cap actually helps consumers.
It comes amid concerns that the cap will result in prices rising as firms simply charge the level of the cap. Experts also say the cap allows firms to charge you up to £62 more than others based on where you live.
Ms Neill said: “The energy price cap can only be a temporary fix - what is now needed is real reform to promote competition, innovation and improved customer service in the broken energy market.
“The regulator needs to closely monitor and report on how the cap affects cheaper deals on the market to ensure that customers will still be encouraged to switch and save money."
To check if you can switch and save, put your details into a free online comparison tool such as Energyhelpline.com or CompareTheMarket.com.
More on energy bills
There are also new online tools, such as Switchcraft, that automatically swap you on to a cheaper energy tariff when your current one ends.
Another way to cut bills is to improve your home's energy efficiency - savvy savers reveal how you can cut your energy bill by HUNDREDS of pounds this winter.
Here's more information on when the new energy price cap comes into force and whether it will save you any money.
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