MILLIONS of households will see energy bills fall by up to £95 in October after Ofgem has announced a slash in the price cap.
Prepayment meter customers will see bills fall by £95 a year while those on default energy deals will benefit from an £84 cut in costs.
The maximum providers will be able to charge default bill payers for energy this winter will be set at its lowest level at £1,042, down from the current cap at £1,126.
For prepayment meter customers the cap will be set at £1,070 a year, down from from £1,164.
The regulator says that it will ensure 15million households continue to pay a fair price for their energy.
Around 11million of these customers are on default tariffs and 4million on prepayment metres, which Ofgem says equates to almost half of the population.
Despite millions of households set to benefit, they can actually save even more by switching supplier.
Households on prepayment meters can save £182 a year by swapping to a deal with Omni Energy – currently the cheapest deal on the market.
Alternatively, they can save £167 annually by switching to People’s Energy, or £166 to a deal with Bulb.
Households on default tariffs paying the current cap will save £315.66 by swapping to a one-year fixed deal with Avro Energy that costs £810.34.
Switching to a deal with Outfox the Market will save you £305.57 a year, or a deal with Robin Hood Energy will save you £305.41 annually.
The price cuts have been driven by lower wholesale costs for gas following the coronavirus pandemic, when in June costs hit a 20 year low.
Energy wholesale prices as much as halved but the savings weren’t passed onto customers because the price cap is set only twice a year – in October and April.
What to do if you can’t pay your bills
FALLING behind on your energy bills can be extremely stressful.
If you’re struggling to pay what you owe, contact your supplier as soon as possible.
Your provider has to help you come up with a solution, and you should be able to negotiate a deal that works for you both.
One option is to agree a payment plan where you pay off your debts in affordable instalments.
You may be able to pay off your debts directly from your benefits through the Fuel Direct Scheme.
A fixed amount will automatically be taken to cover what you owe plus your usage.
To be eligible, you must be getting one of the following benefits:
- Income-based jobseeker’s allowance
- Income support
- income-related employment and support allowance
- Pension credit
- Universal Credit (but only if you’re not working)
If you cannot come to an agreement with your supplier, they may try to force you to get a prepayment meter installed.
In very rare cases, where you refuse to negotiate, your supplier might threaten you with disconnection.
But the regulator warned that if wholesale costs rise as lockdown is eased, the cap is likely to go up again in April 2021.
Richard Neudegg, head of regulation at comparison site USwitch said the delay in passing on the benefits of a drop in wholesale cost is “an unavoidable fallout of the price cap system.”
The price cap was introduced by Theresa may back in January last year and set at £1,137.
They were even accused of running cartel by charging very similar prices.
Ofgem chief executive Jonathan Brearley said: “Millions of households, many of whom face financial hardship due to the Covid-19 crisis, will see big savings on their energy bills this winter when the level of the cap is reduced.”
Mr Neudegg added: “Customers can choose to stay on their energy deal and wait until October to see the cut, or they can reap the benefits of these low wholesale prices today by switching.
“There is a £232 difference between the new October level of the price cap and the cheapest fixed deal on the market now, so there is still a lot of money to be saved by moving off a default tariff.”