Less than a quarter of people understand how it will affect them
- Just 5% of households know how much the energy price cap will save them;
- Only 16% of people think the energy price cap represents a fair price for gas and electricity;
- Warning that first review of price cap in February could slash headline saving figure of £76;
- Centrica’s legal challenge could see the cap recalculated to be less generous for customers.
New research1 reveals that most households are in the dark about the Government’s new energy price cap, which will come into effect on 1 January 2019.
The study, from energy auto-switching service weflip has found that many people are completely unaware of the price cap or, at best, unsure how it could benefit them. Nearly a quarter (23%) of those surveyed said they hadn’t heard of the price cap; 37% were aware of it but didn’t understand how it might affect them; 14% said they had no idea how the cap would work. Only 24% said they knew about the price cap and how it will work, and just 5% of people know how much the energy price cap will save them.
From 1 January 2019 the maximum rate energy providers will be able to charge customers will be capped. The cap has been set at a rate which means that a ‘typical’ domestic energy customer would pay a maximum of £1,137 a year2. The cap is the maximum suppliers will be able to charge per unit of energy and for a standing charge, it is not a cap on the total bill. Therefore, customers using more energy will still pay more than those who use less. Ofgem estimates the cap will save an average customer £76 a year, while a typical customer on the most expensive tariffs could save around £120.
However, the energy cap level will be reviewed twice a year, in April and October, and Ofgem has already warned that it may have to raise the cap when the first review is announced in February, to reflect recent significant increases in wholesale prices.
That’s why weflip is encouraging households not to rely on the energy cap as a way of solving their energy bill problems.
According to the research from weflip, UK households need to reduce their annual energy bill by far more than £76 in 2019. On average, people are looking for an annual saving of £131, with 30% saying they need to reduce their energy bill by £200 or more.
The research asked people whether they were happy with how much they currently pay for their energy. Just under a fifth (19%) were happy with the amount they pay, 81% were looking to cut their bills. Only 16% thought the Government’s energy price cap represented a fair price for gas and electricity.
Commenting on the findings, Sally Jaques, head of energy at weflip, said: “It’s clear from our research that cutting energy bills is going to be a top priority for many households in 2019, with most people looking for savings of almost twice the amount that the new energy price cap is predicted to bring. It’s also clear that most people are either unaware of the cap or uncertain about how much it will benefit them.
“We already know that the level of the cap is set to rise in April, to reflect wholesale price rises over the last six months, and now Centrica plans to apply for a judicial review against the regulator Ofgem, saying it has set the threshold too low. As a result, customers are likely to be even more confused about the cap and whether or not they are getting a good deal.
“The only way households are going to be able to guarantee they are getting a good deal on their energy bill in 2019 is by shopping around and switching. We know most people don’t want to be switching energy provider every year, which is exactly why we created weflip, which lets people register their details once and then we will automatically flip them to better deals for life.”
For more information on how to save on your energy bills for life, visit: https://www.weflip.com/.