South Wales residents overspending by £177 if they rely on energy price cap

Consumers are being urged not to rely on the energy price cap to bring down the cost of their bills as a new report from MoneySuperMarket finds switching deals could save households over £189.

Despite the new energy price cap of £1,042 per year for the average bill being implemented to limit rising energy costs for those on standard variable tariffs (SVT) and £1,070 for prepayment meters, in reality there are over 80 cheaper tariffs available. The cap is due to be updated by Ofgem on 1st October and, while consumers may understandably assume that this means their bills will be kept as low as possible, the evidence suggests you will still be spending more than you need to.

Nationwide, an estimated 11 million households are on default SVTs, which equates to approximately 50% of UK households.

The research also found that 99.88% of people on an SVT could save by switching1, regardless of the price cap. Plus, with energy prices at their lowest for years, locking in to a cheaper tariff for 12 months could result in longer-term savings.

The price cap figures vary across different regions – the ‘Manweb’ power region, which includes Manchester and Liverpool, has the highest regional price cap at £1,076 on average annually. Meanwhile, cities like Nottingham and Leicester in the ‘East Midlands’ power region have the lowest average cap (£1008)[3].

Of the total number of households on SVTs nationwide, 12% are in the ‘Eastern’ power region of the UK, the highest in the country. This includes Norwich and Ipswich and totals over 1.3 million households on the expensive tariffs the price cap has been implemented to limit. This is followed by the ‘Southern’ power region, including Southampton and Portsmouth, at 10% and East Midlands at 9%.

In the Swalec power region, which covers south Wales, 4% of the total number households on SVTs are located, equating to 440,000 homes. With the power region having an average price cap of £1,043 and the cheapest available tariff in the area standing at £865.41, there’s a 17% saving to be made by not relying on the cap.

Stephen Murray, energy expert at MoneySuperMarket, commented: “While the price cap may limit what you will pay, it does not limit what you can save, so relying on it to reduce your bills is unlikely to pay off. Savings are still possible for over 99% of the 11 million households on default standard variable tariffs, so switching your supplier is a quick and effective way to save money over and above the cap.

“Those who haven’t switched energy supplier in over a year will in many cases be paying over the odds for their energy, despite the announcement of the revised energy price cap. The power region you live in will dictate exactly how much you’re able to save, but with potential savings of £189 this could have a noticeable impact on your bills.

“Our advice is to regularly review your energy bills and to shop around for the best deal in order to take control of your finances.”

You can find out more about Ofgem’s energy price cap and how you can save on your energy bills on the MoneySuperMarket website.

References

[1] Tariffs switchable via MoneySuperMarket as of 8th September 2020

[2] 99.88% of customers on a default standard variable tariff can save by switching with MoneySuperMarket, as at 30 July 2020

[3] Regional price caps calculated from average SVT values