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Ofgem have already lowered their cap on average dual-fuel energy bills by £17 in anticipation of the summer months and according to reports, they may once again lower price caps tomorrow. Currently, there is a ceiling in place of £1,127.
However, there could be a bigger reduction announcement tomorrow, as Stephen Murray, an energy expert at MoneySuperMarket, commented: “The expected news that Ofgem is due to drop the price cap by £85 is good news at first glance, but there are more savings to be had if people switch to a fixed tariff now.
“This will allow them to make the most of the current low wholesale energy prices.
“Our view on the price cap has always been clear: don’t rely on the cap to reduce your bills.
“If you’re on an expensive standard variable tariff and want to save hundreds of pounds on your annual bill, switch your energy supplier as soon as you can. It’s simple to do and only takes minutes online.
“Staying with your supplier for too long without switching means that, more often than not, you’ll drop onto a default tariff and pay way more than you need to.
“And with the majority of people still spending more time in their homes due to Covid-19, and with colder months on the horizon, it has, arguably, never been more important to make sure you are on the best deal for you.
“Many great deals are still around from some of the new challengers and established suppliers, with over a hundred deals better than the ‘Big Six’ standard tariffs.”
Stephen’s thoughts appear to be accurate when corroborated with recent research conducted by comparethemarket.com.
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They found that by switching to one of the most competitive fixed or variable rate tariffs on the market people could save households an average of £302 a year.
They revealed that the average price for the 20 cheapest available tariffs is £825, meaning customers could save over £300 by switching provider rather than rolling into a standard variable rate (SVT).
When examining the price gap between the most competitively priced fixed and variable tariffs and the prices charged to those on standard variable or default tariffs, comparethemarket.com found (using data from Ofgem themselves) that 11 million customers stuck on a SVT are collectively missing out on a combined average saving of £3.3 billion by not switching to a competitively priced tariff.
Peter Earl, the head of energy at comparethemarket.com, provided the following comments along with the research: “The energy price cap is clearly a rip off compared to the best value deals on the market.
“Whether the regulator decides to raise or lower the cap will not make a significant difference to those households on a standard variable tariff who will continue to pay over-the-odds for their energy.
“We have recently seen the cheapest deals reach temptingly low-price levels, so switching supplier sooner rather than later means you won’t miss out on high savings.
“The price cap should not be seen as a ‘good’ price to pay for energy; if you can’t remember the last time you switched, or have never done so, you are likely paying hundreds of pounds more a year to your energy supplier than you need to.”
Despite Peter’s criticisms of the price cap, Ofgem details that the rules in place protect consumers from being overcharged.
They detail that these protections can come via two routes.
If costs to supply energy fall, the cap makes sure that suppliers pass on savings to customers.
If the costs rise, then customers can have peace of mind that the caps ensure price rises are justified and that they cannot be overcharged.
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