As the new lower price cap takes effect, don't be lulled into thinking you're making big savings on your energy bills. Which? research reveals how switching gas and electricity supplier could save you four times as much as the price cap will.
Around £75 per year is what the price cap will shave off the bills of those who were being charged the maximum permitted from 1 October.
But you could save closer to £315 per year by switching from a supplier charging at the level of the price cap to the cheapest deal on the market.
To put it in context, a household using a medium amount of energy with a tariff at the level of the price cap will pay around £98 per month. The same household with the cheapest deal could pay £72.
Read on to find out whether the price cap affects you, plus what you need to know when you switch.
We've listed the five cheapest energy tariffs available now, based on the price for a year for a household which uses a medium amount of gas and electricity.
Below you'll find the annual average price and how much this deal saves compared with the current price cap. On 1 October 2019, the price cap on standard and default tariffs was lowered to £1,179 per year for a medium user so we've calculated the savings compared with this.
Your exact spend and savings depend on how much gas and electricity you use, though.
The two cheapest deals are variable tariffs, which means that your bills can change with 30 days' notice if the supplier decides to raise or lower its prices. However, if they do you can look for another deal and switch.
In contrast, the three fixed deals give you stability of knowing what you'll pay for a year. Plus they don't have exit fees so you're free to switch away whenever you wish.
If you're currently on a fixed deal, your prices are set until the end of your contract. Fixed deals often last for one or two years.
When you near the end of your contract you should pick another tariff with your supplier, or switch suppliers. If you don't, you will automatically be moved onto your energy company's default or out-of-contract tariff.
The price cap limits how much suppliers can charge customers on these deals. But if you were on a cheap fixed deal, your bill is likely to go up if you move onto a default tariff, as they're rarely a firm's cheapest deal.
In fact, all of the biggest six firms are charging within £2 per year of the price cap for their default tariffs. So by switching from one of these deals to one of the cheapest deals on the market you could save yourself around £315.
As the weather turns colder and you use more gas and electricity, the last thing you want is a price rise to add to your bills.
The means that suppliers cannot charge customers on these tariffs above a certain amount. But the cap is on the amount charged per unit of gas or electricity - it's not a limit on your total bill. So the amount you pay still depends on how much energy you use.
If your company is already charging you at the level of the cap, your bill shouldn't increase further. But companies charging below the level of the cap can increase their prices up to the limit.
The level of the price cap is reviewed every six months. On 1 October 2019, the price cap was lowered by £75 per year for a medium user. But six months previously it was raised by £117.
If you choose a fixed deal, your prices are set until the end of the deal - regardless of what happens with the price cap. But remember, it's the daily standing charge and rates for a unit of gas and electricity that are fixed, not your overall bill.
Consider carefully before you choose. Autumn last year saw several energy firms stop trading, including Extra Energy and Spark Energy. Some of these firms scored poorly in our satisfaction survey and others had previously missed making Renewables Obligation payments to Ofgem. Suppliers must make these payments to support renewable generation, or risk losing their license.
Ofgem announced earlier this week that four energy firms missed this year's deadline to make the payments and 'have not provided Ofgem with adequate assurances that they will pay by the late payment deadline'.
These suppliers are:
This does not mean that the firms will stop trading. However it does show that Ofgem is concerned they will not pay what they owe and is considering ordering them to pay up. If they don't, it can ultimately remove their licenses to sell gas and electricity.
Prices are based on a dual-fuel tariff available in all regions in England, Scotland and Wales paying by monthly direct debit, with paperless bills.
Energy use is based on Ofgem's annual average figures for a medium user (12,000kWh gas and 3,100kWh electricity per year).
Data is from Energylinx. Price given are averages across regions, rounded to the nearest whole pound and correct on 1 October 2019.