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Good news – your energy bills could be going down

The energy price cap is being cut from 1 April, but only by £17 per year

Energy customers whose bills are subject to the default price cap will see an average £17 drop per year from 1 April, after a 1.4% decrease was announced.

The cut means that the price cap is still higher than when it was originally introduced a year ago in January 2019. Plus it’s the smallest change to the level of the cap so far.

The slight drop is owing to lower wholesale costs, said energy regulator Ofgem, which is responsible for setting the level of the cap and recalculating it every six months.

You’ll be much better off by switching from a tariff at the level of the price cap to a cheaper deal – by up to £348 per year if you use a medium amount of gas and electricity.

The price cap on prepayment customers’ bills is also falling, saving households £17 per year.


Keep reading to check if the price cap applies to you and how much more you could save if you compare gas and electricity prices using our independent service Which? Switch.


Am I covered by the energy price cap?

If you’re on a standard, default or out-of-contract tariff with your energy supplier, the price cap applies to you. Your tariff might have ‘standard’ in the name; otherwise if you didn’t choose a new fixed tariff when your last one finished, you’ll have been transferred on to an out-of-contract tariff.

Similarly, if you have never switched energy company or tariff, you’ll be on a default deal which is subject to the price cap.

There’s a separate cap on tariffs for all prepayment meter customers.

Ofgem also announced that it will review whether the price caps should be completely lifted at the end of the year.

Will the price cap cut save me money on my energy bills?

If your energy firm’s out-of-contract tariff is priced at the level of the current cap, then it will have to be reduced by £17 to meet the new level from 1 April. This means that you’ll save money, but not much.

But some energy firms already sell their out-of-contract tariff for less than the new price cap. So they won’t have to change their prices and you won’t see your bills change.

Remember, the price cap is a limit on the daily standing charge and price per kWh for gas and electricity charged. It’s not a limit on your total bill, though – that still depends on how much gas and electricity you use.

The figures commonly quoted – such as £1,162 for the new ‘level’ of the price cap – are averages across regions and based on a household using energy regulator Ofgem’s definition of a medium user. The real maximum you can be charged is different depending on how much gas and electricity you use, and where you live.

Prepayment meter price cap changes

If you pay as you go for gas and electricity, your bills might also go down from 1 April. The 1.4% change in the prepayment price cap means affected customers will pay £17 less per year.

As with the default price cap, how much your bills could change depends on whether your energy supplier is charging at the level of the price cap at the moment, or beneath it. Plus, any savings will vary depending on how much gas and electricity you use.

Why are the energy price caps changing?

Ofgem said the slight fall is due ‘a large part’ to ‘wholesale energy prices continuing to fall between August 2019 and January 2020. A strong supply of gas, such as record amounts of liquefied natural gas and healthy gas stock inventories, has been the main factor pushing down wholesale prices’.

The reduction in wholesale costs offset increased costs for operating, network charges, smart meters and environmental schemes, it explained.

How can I save money on gas and electricity?

The simplest way to save money is to switch to a cheaper tariff or energy supplier. There’s a potential saving of £348 per year for a household using a medium amount of energy. That’s if they switch from a tariff at the level of the price cap to the cheapest deal currently available on the market.

See the top five cheapest energy deals for February.

But before you switch, check what customers think of the supplier using the best and worst energy companies for 2020 – our latest research with more than 8,000 energy customers.

Which? energy pricing research

A medium user is based on the Ofgem average for a user of 3,100kWh electricity and 12,000kWh gas per year.

Prices are based on a dual-fuel customer, paying by direct debit with paperless bills. Prices are averages across all regions in which they are available and correct on 4 February 2020. Data is from Energylinx.

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