The new energy price cap won’t cut bills for customers on three in ten dual-fuel deals, some of which cost almost £200 more than the cap per year for a medium energy user, according to new Which? Research.
Which? looked at all energy deals available and identified more than 70 fixed deals that were more expensive than the proposed energy price cap, which limits the amount you can be charged for certain elements of your bill. The priciest of these was £1,332 a year for a medium user- £196 more than the average price cap of £1,136.
The cap, which is set to be introduced by the end of this year, will save households £75 a year on average according to Ofgem, though will only apply to default tariffs (usually variable), so those on expensive fixed tariffs won’t benefit from it.
While some households on default tariffs will save money under the cap, Which? is advising consumers to consider switching as much bigger savings can be made by changing energy supplier. Which? research found 98 energy tariffs which cost less than the proposed cap, with the cheapest deal costing £258 a year less for a medium energy user.
Medium energy users who are on the priciest Big Six standard default tariff would save £121 a year on average with the cap. But they could save £378 per year by switching to the cheapest available deal. The energy price cap will be set at different levels around the country – depending on how much it costs to provide gas and electricity to a particular region.
The cap will be highest in the South-West at £1,173 per year, £37 above the average, while those in Yorkshire will have the lowest cap at £1,110 per year, £26 below the average.
Regardless of whether your bills will be capped, the actual amount you pay will still depend on how much gas and electricity you use.
Which? believes the energy cap can only be a temporary fix, designed to rein in the worst excesses of the broken energy market and is no guarantee of a better deal for consumers overall.
Which? is also concerned that customers will be less likely to switch supplier under the cap and Ofgem agrees, suggesting that switching rates might drop by up to 50 per cent.
Alex Neill, Which? Managing Director of Home Products and Services, said “While this cap may cut energy bills for some, people shouldn’t be lulled into a false sense of security that they are getting the best deal. As our research shows, the cap won’t cut everyone’s bills and you can save more by switching. The price cap is only a temporary fix, what is now needed is real reform to create competition, promote innovation and improve customer service.”
|Region||Proposed energy price cap per year|
|North Wales & Mersey||£1,158|
Regions and prices are from Ofgem’s model of the default tariff cap level, September 2018, including VAT: