Despite the fanfare surrounding the new energy price cap, a majority of customers do not think it will actually save them any money.
Most energy customers don’t trust the energy price cap to lower bills, with only 18% of consumers expecting to see their bills go down as a result, according to data from MoneySuperMarket.
Energy regulator Ofgem introduced the energy price cap on 1 January to protect customers from unjustified price rises.
Ofgem has set the cap at £1,137 per year and says it should save the average customer around £76 on their bills.
However, at the beginning of February the cap is set to be reviewed and could rise by as much as £100 – potentially wiping out any savings.
The MoneySupermarket research suggests many are sceptical when it comes to the price cap and its effect on how much people will pay for their energy.
The survey of 2,000 UK adults found that almost a third (30%) expect to be worse off once the cap is reviewed, while two-thirds (65%) think their bills will remain the same. Just 5% of people think they will benefit financially from the new level.
Young people (18 to 24-year-olds) have the most faith in the price cap, with 35% expecting their energy bills to drop as a result. However, only 9% of those over 70 think the cap will lower their payments.
Just a quarter (27%) of 18 to 24-year-olds know what their bills are across a year, while those the over 70 (83%), have the highest awareness.
|Will the new energy cap lower bills?|
|Age bracket||Percentage that believe the price cap will lower bills||Percentage that know how much they pay for energy|
Source: MoneySuperMarket, January 2019
Price hike warning
Annual energy bills in Britain have doubled over the past decade, rising by about £1,200 per household.
Customers attracted by cheap year-long fixed tariffs end up being moved on to the pricier standard variable rate once their deal ends, unless they switch providers.
If the price cap goes up by £100 this could raise the amount a household pays for the cap from £1,137 to £1,237.
Experts have warned that suppliers could hike prices once the cap goes up and that it could actually cost consumers more money if they don’t shop around.
Stephen Murray, energy expert at MoneySupermarket, says: “The savings for 2019 look likely to be wiped out, with market forces dictating the cap will rise significantly - possibly by £100 - from 1 April 2019.
“The cap has had the unintended consequences of introducing further complexity to the energy market, creating uncertainty and insecurity for consumers who don’t realise the cap can put their prices up as well as down.
“Relying on the regulation could actually end up costing you more money, so the message is clear – take control of your bills. If you go online and switch to a competitive tariff today, either with a Big Six or emerging supplier, you could see your annual bills come down by £200.”