11 million customers could see savings next year as regulator Ofgem has finalised the figure for the new energy price cap at £1137.
This cap, which will be effective as of the new year, could provide an average saving of £76 a year on gas and electricity.
Suppliers will have to keep the price of their default tariffs on the level of the cap, or below it for the average dual fuel costumer paying by direct debit.
Britain’s energy and clean growth minister Claire Perry issued a statement, saying: “In the past few months loyal energy customers have continued to be hit by unjustified price rises on their already rip-off tariffs,
“Today’s final cap level brings greater fairness to energy prices.”
Ofgem is capping is the unit price of energy and the standing charge, not the overall bill. Those who use more energy will still pay more than those who use less.
Households with an average usage of gas and electricity will save about £76, while those paying the priciest tariffs will save about £120.
However, by switching suppliers it is possible to make annual savings of £285, according to the government.
"While the price cap will ease the financial burden for some households, people shouldn't be lulled into a false sense of security that it will mean they are getting the best deal," said Alex Neill of Which?.
"Switching is still the best way to save money on your energy bills."
Unfortunately, the cap may rise in April next year, Ofgem said.
"Unfortunately, any joy that long-suffering households feel today is likely to be short-lived," said Stephen Murray, an energy expert at MoneySupermarket.
"Ofgem is attempting to protect consumers by launching this cap with a £76 savings message, but it's simply not sustainable. The cap will be reviewed again in February, when market forces look likely to dictate it will rise significantly."
Any rise in the cap "would only reflect changes in the actual costs of providing the gas and electricity they use rather than supplier profiteering", said Ofgem.
Ofgem has admitted that the introduction of the price cap may negatively impact the numbers of people switching suppliers, where the greatest savings lie.
"It will probably lead to less switching," Dermot Nolan, the chief executive of Ofgem, told the BBC's Today programme.
However, he noted that the cap serves to protect customers, not generate the most savings: “if you choose not to switch you can still get a fair level of protection.”
He added that “Consumers who want to cut their bills further should shop around for a better energy deal and while the cap is in place, we will continue our work to make this as easy as possible.”
Lawrence Slade, chief executive of industry group Energy UK, on similar lines noted:
“It is crucial that the cap doesn’t halt this growth of competition and choice and still enables energy companies to both invest and attract investment.”
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