Households urged to shop around for best deals as energy price cap kicks in

Customers wanting to save should not place too much faith in new regulation and must continue to shop around to get better deals, experts warned as the energy price cap came into force this morning.

The cap, which limits the price paid for each unit of energy, will mean a fairer deal for consumers, but does not limit their total bill, Citizens Advice said.

The measures are expected to save the average customer around £76, according to regulator Ofgem.

“The introduction of this cap will put an end to suppliers exploiting loyal customers. However, while people on default tariffs should now be paying a fairer price for their energy, they will still be better off if they shop around,” said Gillian Guy, chief executive at Citizens Advice.

“People can also make longer-term savings by improving the energy efficiency of their homes. Simple steps, such as better insulation or heating controls, are a good place to start.”

The measure will help over 11m households on default tariffs from being overcharged for their energy usage.

The energy bills will be capped at £1,137 per year for a typical dual fuel customer paying by direct debit.

However, prices could still rise as Ofgem is set to review the cap in April and every six months after that.

Energy and Clean Growth Minister Claire Perry said: “For too long, suppliers have failed to pass on any savings to their customers, who deserve to pay a fair price for their gas and electricity. Switching supplier is still the best way to find a better deal, but that doesn’t mean customers should be punished for their loyalty.”

Alex Neill the managing director of consumer group Which? said: “The energy price cap can only be a temporary fix – what is now needed is real reform to promote competition, innovation and improved customer service in the broken energy market.

“The regulator needs to closely monitor and report on how the cap affects cheaper deals on the market to ensure that customers will still be encouraged to switch and save money.”