Energy Switching and the Price Cap – How Households can Save
Effective 1 January, regulator Ofgem has set in motion an energy price cap impacting millions of households across the UK. All standard and default tariffs are impacted, effectively limiting the price per unit on energy provided to and used by consumers.
A maximum of £1,327 per year is the new cap, based on an average dual-fuel household paying via direct debit. For those not on direct debit, the cap is £1,221 per year. The price cap is intended to provide a savings of £76 per home, per year on average, but the actual savings reaped by consumers will vary greatly depending on their specific energy use.
While the price cap on energy is beneficial on the surface, there are other methods to help reduce the cost of gas and electricity for the long-term. Consumers may be aware of their ability to switch energy providers to help save on bills each month, but many have yet to research the ins and outs of doing so. Energy switching is still the best way to save on these necessary expenses each month – and the process to implement a switch is easier than many think.
To Switch or Not to Switch
One of the many reasons consumers across the UK should consider their options for switching energy providers has to do with the temporary nature of the price cap set by Ofgem. The limit on the price per unit currently in place is set to be reviewed in April of 2019, and many predict that the cap will be increased at that time. The regulator is also slated to review the price cap each year moving forward, at least until 2020 but likely as long as 2023. The cap helps for some but only for a short period, making switching a more viable, long-term option.
According to a finance specialist at an energy comparison site, changing suppliers is both an easy and fast process that can yield hundreds in savings each year, even with the price cap in place. Whether consumers rent or own their home, switching gas and electricity suppliers is an option available to anyone.
The process begins with comparing available energy companies through a comparison site, armed with a recent energy bill that includes details about the current energy plan in place. Inputting this information online returns the options available as far as which energy suppliers can be selected, and the amount a renter or homeowner can save by doing so.
Once a choice is made on a new energy supplier, things move swiftly. The new energy company arranges the switch, typically getting meter readings from the consumer and setting up direct debit as the payment method. The previous supplier sends a final bill once these arrangements have been made. The price cap may be helpful for many initially, but this simple process of switching means saving for the long-term, and knowing that the price paid for gas and electricity is the most cost-effective for the consumer.
Other Methods to Save on Energy Costs
Switching energy suppliers is a smart way to save on energy costs, but there are other actions renters and homeowners can take to reduce their monthly electricity or gas bills. Enrolling in direct debit with the current or new supplier can bring down the bill total, and it offers peace of mind that payment won’t be missed.
Reducing energy consumption is also an option for some. This may involve bringing the temperature up or down during hours the home is not being used or occupied, or taking the time to unplug or turn off items that use electricity when they are not actively used.
For homeowners, creating a more eco-friendly property can be the most beneficial. Adding solar panels, replacing out-dated or poorly functioning heating and cooling systems, or reinforcing insulation around doors and windows can be a tremendous help.
Consumers have several ways in which they can minimise costs on energy use each month, but the most will save significantly by switching to a new energy supplier. The ability to comparison shop is made far easier with online platforms and resources, and the process takes less than three weeks to complete in most cases. Adding in other steps to reduce energy consumption, combined with the new price cap, also help keep a lid on gas and electricity prices for millions of homes.