Energy regulator Ofgem has announced plans to cap energy bills at £1,136 year for a typical household paying for their energy monthly by direct debit, which will save the average family around £75 a year. The price cap will be confirmed next month and is due to come into effect at the end of December. There is already a price cap in place for prepayment and vulnerable customers.
Mark Todd, co-founder of energy comparison site energyhelpline.com said: “This is a strong move from Ofgem that will have a real impact for the 11 million standard tariff energy customers in the UK. This will hit big suppliers hard and squeeze their profits. Now they will need to rethink their strategy and work much, much harder to remain competitive.
“But for consumers, the changes only go as far as banning rip offs. Customers could still save an extra £200 to £300 per year by switching supplier. With over 80 suppliers active in the UK, customers have the power to vote with their feet and get a better deal.”
Fight back against rising costs
Making sure you’re on the most competitive energy tariff possible is more important than ever following spate of price increases from the big six suppliers. According to research by uSwitch.com, there have been 43 energy price rises from 30 suppliers so far in 2018 – a rate of over one per week, totalling £840 million a year.
The price rises announced so far will affect 12 million households, bumping up annual costs by an average of 7% (£70) each. Scottish Power and Economy Energy are the latest suppliers to hike prices. Dual fuel Scottish Power customers on a Standard Variable Tariff (SVT) will see their annual bills go up by an average of £46 from October 8, whilst Economy Energy’s hefty 38% price rise, equivalent to a £311 annual increase in costs for a typical energy user, will take effect on October 7.
Rik Smith, energy expert at uSwitch.com said: “The Government’s proposed cap on standard energy tariffs is expected to be in place by the end of 2018 December, but households stand to gain far more by switching away from these poor value plans than relying on the cap – which will change every six months and will be set at a higher level if wholesale energy costs continue to rise.”
Switching energy suppliers doesn’t involve any new pipes or meters and can be arranged online via an energy comparison site within a couple of minutes. The switch itself should be completed within 17 days. Signing up to a collective energy switching scheme, whereby you join forces with other people to negotiate a group deal, often gives you access to some of the cheapest energy tariffs, as ‘bulk-buying power’ can be used to drive down costs.
Before switching, remember to check whether there are any cancellation charges to leave your existing deal. Even if there are, it still may be worth moving to a better tariff if the savings you can make are greater than these exit charges.