Savings from Switching your Energy Supply
Last Update: 5 February 2021
On 5 February 2021 Ofgem, the gas and electricity regulator, announced the level of the Energy Price Cap for the 6-month period commencing 1 April 2021. As we predicted, it was a right shocker. In a nutshell…
- The price cap is getting hiked by £96 (9.2%) from 1 April 2021 – Standard tariffs will follow suit shortly.
- 11 million consumers just got handed a bill for £1 billion.
- Rising wholesale energy prices accounted for £66 (69%) of the increase.
- Higher bad debt costs associated with lockdowns accounted for a further £23 (24%).
- Savings from switching will jump back towards £250 once energy suppliers update their prices.
- If you are still on a default standard tariff all we can say is….really?
To date, there have now been 6 energy cap price levels – 4 down, 2 up. The net change from pre-cap levels has been a reduction in average energy bills of £41 (3.5%). You can see the full history in the table below.
|Energy Price Cap Version||Runs from||Runs until||Price Level -|
|Price Level - |
|Net change -
|Pre-cap opening level||On 31 Dec 2018||1,221||1,179|
|v1||1 Jan 2019||31 Mar 2019||1,137||1,104||£75 cut|
|v2||1 Apr 2019||30 Sep 2019||1,254||1,217||£113 increase|
|v3||1 Oct 2019||31 Mar 2020||1,179||1,143||£74 cut|
|v4||1 Apr 2020||30 Sep 2020||1,162||1,126||£17 cut|
|v5||1 Oct 2020||31 Mar 2021||1,042||£84 cut
|v6||1 Apr 2021||30 Sep 2021||1,138||£96 increase|
|v7||1 Oct 2021||31 Mar 2022||1,277||£139 increase|
|v8||1 Apr 2022||30 Sep 2022||1,971||£693 increase|
|v9||1 Oct 2022||31 Dec 2022||3,549||£1,578 increase|
|v10||1 Jan 2023||31 Mar 2023||4,279||£730 increase|
|v11||1 Apr 2023||30 Jun 2023||3,280||£999 cut|
|v12||1 Jul 2023||30 Sep 2023||2,074||£1,206 cut|
|Energy Price Guarantee|
|During the EPG period (1 Oct 2022 to 31 Mar 2024) the Energy Price Guarantee takes over from the Energy Price Cap as the price setting mechanism at any time that the Price Cap rises above the prevailing EPG rate.|
|Energy Price Guarantee|
|1 Oct 2022||30 Jun 2023||2,500|
|Energy Price Guarantee|
|1 Jul 2022||31 Mar 2024||3,000|
|Source; energyscanner.com, |
Figures have been recalculated based on the latest average domestic consumption values to make them comparable over. These will differ from Ofgem’s reported historic figures as Ofgem has not yet adjusted its data. You are welcome Ofgem.
After 6 iterations of the energy price cap, here is where things stand.
- In the 12 months before the price cap came into effect, the price differential between a basket of the cheapest deals and the basket of the Standard tariffs of the Big 6 was £288. That is what the household with average energy usage would have saved themselves, each year, if they had switched their energy.
- The price cap has now been in operation for 25 months.
- In those 25 months the cap has reduced the price differential in only 7 monthly periods (28% of the time).
- 72% of the time the price differential has been greater than it was without the price cap. This means that is the price cap has been making the situation worse for energy consumers, not better.
- Any customer who has stuck with the price cap has, to date, already lost out to the tune of £691 and counting. Is that you?
The eagle eyed will have noticed that savings from switching energy supplier have fallen quite a bit recently. Indeed that is true courtesy of the £84 cut to the energy price cap that was put through on 1 October 2020. However, once energy suppliers re-adjust their energy tariffs to the level of the price cap, then savings will increase accordingly, back towards £250.
How much can I save by switching energy supplier?
In February 2021, savings from energy switching for a household with average energy usage are approximately £180 for customers paying by Monthly Direct Debit. However, if you still pay quarterly by cheque or debit card then the saving jumps to £259 a year. This will jump back towards £250 / £330 respectively once energy suppliers adjust their prices to the new price cap.
This savings figure is based on the cost of Standard Variable tariffs of the Big 5 compared with a basket of the cheapest energy deals in the market. To get a precise comparison please use our energy price comparison service.
Joe Malinowski, founder of energy price comparison website energyscanner.com commented
“The outlook for energy consumers is the worst I have seen in over a decade. Rising wholesale energy prices combined with COVID-19 and lockdown costs will push the price cap up sharply in 2021. That cap will then be applied to increased energy usage during lockdown which will see energy bills soar. It’s misery as far as the eye can see.”
Joe Malinowski continued.
“The energy price cap has been an abject failure. Its fundamental objective was to ensure consumers would end up overpaying by less. Our analysis shows that it has failed to achieve this 72% of the time and has left consumers worse off than they would have been without the cap.”
Joe Malinowski, concluded.
“Customers on standard default tariffs have already lost out by £691 and counting. It really is time for the consumer to wake up, smell the coffee, switch on their laptop, do a price comparison and switch to a cheaper deal. That is the only way out of this mess.”
How we calculate savings from switching your energy supply
Savings shown compare the price of the Standard Variable Tariffs of the Big 5 energy suppliers with a basket of the cheapest* energy deals in the market at the beginning of the month.
Energy usage is based on current Ofgem average typical consumption values – 12,000 kWh a year for gas usage and 2,900 a year for electricity usage.
Analysis is based on Standard electricity meters only (does not include Economy 7 or night time usage meters). If you have an Economy 7 meter please use our domestic energy comparison service to get a customised quote.
Energy bills are calculated for each energy region and then averaged. Average bills are calculated for the 2 main payment methods – monthly direct debit and quarterly by cheque or debit card.
These are then compared with the cheapest* deal in the market at that time. Cheapest* in our methodology means the tariff that satisfies the following criteria.
- Has a duration of 12 months or longer.
- Has national coverage (excludes regional tariffs)
- Is widely available to consumers (excludes exclusive deals).
- Does not have onerous payment conditions – for example taking money out of customer accounts before supply start date.
* There may be cheaper tariffs that do not meet these criteria. However, they are excluded from our analysis for comparability reasons.
Your actual savings will depend upon your personal circumstances and which are affected by several factors. For example, where you live, how much energy you use, how you choose to pay for that energy (it can make a big difference), your meter type and, most importantly, which supplier and tariff you are currently on. So, if you want to avoid being ripped off with sky high energy prices use our energy comparison service to see how much you can save
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If you are new to switching you might want to read our Energy Switching Guide first.