Energy watchdog cuts price caps that protect customers on poor value deals slashing gas and electricity bills for 15 million households by up to £75 this winter
- Cap on standard variable tariffs falls by £75 to £1,179 for 11 million customers
- Ofgem says that price cap for 4 million pre-payment meters is also dropping
- A gas glut has seen British and Dutch gas prices halve since September
Watchdogs will cut the energy price cap today, reducing typical annual gas and electricity bills by up to £75 a year
Around 15 million households will see gas and electricity bills drop this winter after the energy watchdog cut price caps designed to protect those on poor-value deals.
Ofgem said the level of the price cap for default and standard variable tariffs (SVTs), which protects around 11 million customers, will fall by £75 to £1,179 from October 1 due to lower prices in wholesale energy markets.
The regulator added that the price cap for around 4million pre-payment meter customers will also fall – by £25 to £1,217 a year from October 1.
It said wholesale energy costs had fallen ‘significantly’ since February, when it last reviewed the price caps.
Ofgem chief executive Dermot Nolan said: ‘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 pre-payment meters will fall this winter to reflect the reduction in cost of the wholesale energy.’
But Ofgem stressed households are still better off by switching away from default tariffs and SVTs to get the best deals in the market.
The measure forced the Big Six – British Gas, SSE, EDF, Eon, Npower and Scottish Power – to cut the cost of energy for the 15 million households on a standard variable tariff
‘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,’ said Mr Nolan.
The measure forced the Big Six – British Gas, SSE, EDF, Eon, Npower and Scottish Power – to cut the cost of energy for the 15 million households on an SVT.
But they could have saved more by moving to a fixed rate deal.
The cheapest such dual fuel tariff costs around £951, a saving of more than £200 on the lower cap to be set this morning.
The regulator Ofgem decides the maximum price per unit based on changes in the wholesale cost. The lower figure will come in on October 1 and last all winter.
A gas glut has seen British and Dutch gas prices halve since September, after a liquefied natural gas influx shipped by tanker, and gas from Russia and the US.
Lily Green from price comparison site Look After My Bills says that 11 energy suppliers will have to cut tariffs and that customers have been paying a loyalty penalty of hundreds of pounds a year.
‘The price drop should have come a lot sooner… You can’t trust suppliers to lower your energy bill,’ she said.