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Energy prices set to fall – how can you benefit?

Energy prices set to fall – how can you benefit?

There’s great news at last for millions of consumers among all the economic and political uncertainty – energy bills look set to fall this autumn!

Ofgem, the energy industry regulator, recently announced it would be lowering the price cap it places on how much gas and electricity providers can charge.

This means that the standard charge for a typical user should fall from around £1,254 a year to £1,179. That’s an average annual saving of £75, with most energy companies expected to set prices within a few pounds up to the new limit.

How does the price cap work?

Ofgem sets a maximum price for the amount suppliers are allowed to charge for each unit of gas and electricity used, as well as the maximum standing charge – the amount you would pay even if you didn’t use any electricity or gas at all.

Many householders are on providers’ standard or default tariffs, as opposed to those on fixed or special deals they might have switched to. These tariffs are often the most expensive, but, for a variety of reasons, plenty of consumers don’t ever switch providers and deals – they either don’t get around to it, are confused by the options, aren’t aware they could save or simply can’t be bothered.

The new charges start in October, but many consumers won’t see their bills fall until a month or two after.

How to benefit

If you’re on a standard or default tariff, there isn’t anything you really need to do as the reduction should apply automatically.

However, to benefit the most from the cross-market price cut, you should shop around and compare deals.

If you’re on a capped tariff, there will be no exit fees to switch and you should benefit both from the price reduction and a new improved deal – so get switching!

How to compare deals

There are plenty of energy comparison sites online so you can check out what’s on offer. It’s best if you have an annual statement on hand so you can input your usage figures, which allows you to make the most accurate comparison, as some deals are better depending on how much energy you use.

Ofgem offers encouragement

The chief executive of Ofgem, Dermot Nolan, was clear about how people will benefit, saying “The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.”

“This means the energy bills of around 15 million customers on default deals or prepayment meters will fall this winter to reflect the reduction in cost of the wholesale energy.”

Nolan re-enforced the benefits of shopping around when he added “Households can cut their bills further in time for winter, and we would encourage all customers to shop around to get themselves the best deal possible for their energy”.

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Published 21 August 2019