The number of energy deals priced at under £1,000 has soared ahead of the next review of the price cap, according to new Which? analysis.
The consumer champion assessed the availability of cheaper energy tariffs priced under £1,000 a year for a medium user, and found there are currently 78 deals available compared to just 12 when the cap was first introduced on 1 January 2019.
The cap was introduced by the energy regulator Ofgem to protect customers on poor value default or standard variable tariffs. It was initially set at £1,137 per year, however following the first review in April 2019 it was raised to £1,254 and millions of customers saw their energy bills rise to within £1 of the maximum level of the cap.
When the price cap was last adjusted to £1,179 on 1 October 2019, the number of cheap deals under £1,000 had crept up to 39.
Which? researchers found there are now 78 energy tariffs under £1,000 – a six-fold increase compared with the day the price cap was introduced.
The analysis showed there are also 25 energy deals under £900 currently on the market – a price that simply was not available when the cap was first introduced on 1 January 2019.
The average price of the 50 cheapest deals is currently £899 compared to £1,025 when the price cap was first introduced at the start of last year. This is also more than £60 cheaper than the average price of the 50 cheapest deals on 1 October, which was £965.
Since the start of last year, the number of cheap deals has steadily climbed and falling wholesale prices for electricity and gas are just one of the factors which have allowed energy companies to offer customers cheaper deals.
Despite the increase in cheap deals on the market, disengaged customers on default or standard variable tariffs could still be paying hundreds more than they need to – especially as the price cap level has yet to drop below £1,000 a year.
With Ofgem set to announce the latest price cap level in the next few days, Which? is urging customers stuck on default or standard variable tariffs to take advantage of the wider choice in cheap energy deals.
While price will be an important factor when switching energy suppliers, customers should also consider how firms compare on customer service and their performance when it comes to complaints handling and billing accuracy.
Natalie Hitchins, Head of Home Products and Services, Which?, said:
“The number of cheap deals on the market has shot up in recent months, but customers stuck on standard variable or default tariffs may not realise they are paying hundreds more than they need to, despite the price cap.
“Customers fed up with expensive bills should consider shopping around to secure one of the many cheaper deals available – you could potentially save hundreds of pounds a year and find a supplier that offers better customer service.”
Notes to editor
Prices are based on a snapshot (31 January 2020, 1 October 2019, 1 April 2019 and 1 January 2019) of dual-fuel tariffs, paid by fixed monthly direct debit with paperless bills, for a medium user (using Ofgem’s averages of 12,000kWh gas and 3,100kWh electricity per year). The data is from Energylinx, prices are averages across the regions in which they are available, rounded to the nearest pound and correct on 31st January 2020.
For the full results of the annual energy satisfaction survey, including how customers rate their energy supplier’s customer service, value for money, bills, complaints handling and more, go to: www.which.co.uk/switch
Consumers looking for cheaper energy deals can compare deals with Which? Switch, a transparent and impartial way to compare energy tariffs and find the best gas and electricity supplier: www.which.co.uk/switch