Government’s energy price cap will keep four million households on a bad deal

The Government’s new energy price cap will result in over four million households staying on poor value standard variable tariffs (SVTs), according to new research from energy auto-switching service weflip.^1.

The cap could stop people switching:

• 15% (4.1m) of households say that the £76 average saving expected from the cap will encourage them to stay with their current supplier
• 10% believe that they no longer need to do anything to get a good deal on their energy bill
• Most worryingly, 6% of households said they had intended to shop around for a better deal, but that the introduction of the cap means that they now won’t bother

The energy price cap, which promises to cut the cost of bills for 11 million households on energy providers’ poorest value default tariffs, will come into force on 1 January 2019.  It’s estimated that the cap will save these customers an average of £76 a year, although actual savings will depend on how much energy a household uses and the supplier they are with.^3. 

The thinking behind capping SVTs is that energy suppliers will have to stop exploiting loyal customers by setting a fairer price on these default tariffs. The cap has been set £1,137 a year, but it’s a cap on the rate than can be charged, not a maximum amount that any household will have to pay, so those who use more electricity and gas will pay more. 

The cap doesn’t fit:

• Over a third (36%) of people think the cap has been set too high
• 19% expect that capping tariffs will make no difference to them
• Just two in five (39%) people believe the price cap is a good idea
• Nearly a fifth (19%) fear that the cap will result in higher energy prices for everyone as suppliers seek to recoup lost revenue by raising the prices of their best value tariffs
• A significant minority (18%) of those surveyed were against the price cap, believing people should be left to switch their energy supplier if they want to

Commenting on the research, Amanda Cumine from weflip said, “We share the concern of the people we surveyed that the price cap could inadvertently put people off from switching rather than create a more competitive market.  According to Ofgem, over half of British households are on their energy supplier’s most expensive default tariffs because they have either never switched or haven’t done so recently.  And we know from our own research that households, on average, have only changed energy supplier once in the last five years – despite energy prices rising by 11% over this period.^4.

“Ofgem’s own figures show that you can save as much as £285 by switching, therefore the cap – with its projected average saving of £76 – could actually be costing these households over £200 a year.  It is crucial that the cap does not result in millions of people becoming even more reluctant to switch to good energy deals.    

“We appreciate that most people don’t want to be shopping around and switching energy provider every year, which is exactly why we created weflip.  Users only need to register their details once and then they will be automatically flipped on to a good deal for life – without having to repeat the process year after year. 

“We need to show people that there is a better, long term solution to the cost of energy bills and that it’s about more than just putting a cap on.”

How weflip works

Customers register their details and provide information including current supplier and tariff, energy usage – which can all be found on an existing bill.  weflip’s algorithm pinpoints the best deals and identifies the right moment to switch a customer’s energy supplier by comparing thousands of tariffs.

weflip checks daily to see if there is a cheaper tariff available to customers (including any exit fees to leave their current deal).  Once a saving of at least £50 (including fees) is identified, it automatically moves them onto the new, cheaper deal.  Typically, the process takes 21 days and customers can expect to be switched two or three times a year.

For more information on your saving on your energy bills for life, visit: https://www.weflip.com/

-ends-

For further information please contact:

Anders Nilsson, Martyn John and Louisa Marsden on media@weflip.com

Gordon, Jason or Liz at MAW Communications on 01603 505 845

Notes to editors:

1. On 5 October 2018, Bilendi conducted an online survey among 2,002 randomly selected British adults who are Maximiles UK panelists. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.
2. Source: Office for National; Statistics Families & Households: in 2017 there were 27.2 million households in the UK. 15% of 27.2 million is 4,080,000.
3. Based on a typical dual fuel customer paying by direct debit.

^4.Source: Ofgem’s Retail price comparison by company and tariff type: Domestic (GB) https://www.ofgem.gov.uk/gas/retail-market/retail-market-monitoring/understanding-trends-energy-prices

Average Standard Variable Tariff (Six large suppliers): In the five years 28 August 2013 (£1,074.45) to 28 August 2018 (£1,194.000) prices rose by 11%. 

About weflip

weflip is a smart savings service that helps people save money by automatically switching them to better energy deals.

weflip is a completely free, automatic savings service that guarantees cheap energy forever.  After customers sign up, weflip simply flips households onto cheap energy tariffs automatically, doing all the hard work on their behalf, so they never have to worry about overspending on energy ever again.

weflip is part of GoCompare.com Group plc, which operates GoCompare, one of the UK’s largest and most trusted comparison sites and has been saving customers money on a range of financial and non-financial products since 2006.

weflip’s energy service is powered by Energylinx, which is also a GoCompare Group plc company, and one of the UK’s most established and respected energy comparison services.

weflip takes customer privacy seriously and does not sell customer data.

For more information visit www.weflip.com and www.gocomparegroup.com.