Ofgem has announced that the price cap for standard variable tariffs has fallen by £84 and prepayment meter tariffs by £95, which will take effect from 1 October 2020.
The average annual SVT is now sitting at £1,042, the lowest the price cap has been since it was introduced in 2018, due to the coronavirus pandemic lowering wholesale energy demand.
This comes as good news to energy customers who are on SVTs and prepayment meters, who could end up saving money if they are on poor-value deals.
However, customers on any other energy deals, such as fixed-term tariffs, are already beating the price cap by paying a cheaper, set annual rate for their energy.
It’s worth mentioning that as the UK adjusts back to normal, demand for wholesale energy will go up, and as a result, the energy price cap could, too.
Fixed energy tariffs are the ideal way to protect yourself from said price hikes, and due to the Covid-19 Pandemic, there are some great value-for-money deals on the market. While the price cap might lower the price you pay per unit of energy if you’re on an SVT or prepayment meter tariff, they’re still the most expensive deals on the market.
Victoria Arrington, spokesperson for Energy Helpline, comments:
“Although the price cap is moving to its lowest level since its introduction in 2018, these regulated variable tariffs - £254* more expensive than the best deal on the market - represent anything but good value."
“Lower wholesale energy prices have also increased the number of competitive, fixed tariff deals – meaning now is a particularly good time to consider switching.In addition, these deals lock in today’s low price for 12 months or more, protecting from any potential future price rises."
“Competitive, fixed tariffs are particularly important given increased energy usage during the Covid-19 pandemic, which means consumers are spending more on energy this year. Recent analysis by Energy Helpline indicates that Direct Debits, based on pre-lockdown usage levels, may be widely under-billing customers to the tune of £94.45 per household."
“This means that,at a time when consumers would normally be increasing credit to balance out the cost of their winter bills, they may actually be quietly building up debt.It’s important that consumers give suppliers an up-to-date meter reading to make sure bills reflect the energy actually used,in order to avoid significant domino debt later in the year.”
Over a million switched and saved with Energy Helpline
From August 2019 to July 2020, we have helped over a million customers^ switch and save money on their annual energy bills.
Despite the price cap falling back in April to £1,127, there has still been an increase in customers switching their energy tariffs to lock in great prices for a fixed period.
To become a saver, switch today by entering your postcode on our main page to get started. Continue by filling in a few usage details and we’ll be able to show you the best deals tailored to your search results.
*Savings figures are calculated with the cheapest available tariff available as of 06/08/20 (Outfox the Market’s “One Green Flex 2.0”, priced at an annual average cost of £788) vs. the new Price Cap rate as of 1st October 2020, priced at £1,042. All energy calculations are based on an average usage dual fuel household paying by monthly direct debit on a single rate meter.Average usage as defined by OFGEM is 12,000 kWh pa of gas and 2,900 kWh pa of electricity. Correct as of 07/08/2020.
^Energy Helpline data, Aug 2020.