Of the households with a standard variable tariff (SVT), 68 per cent said they didn’t know the price cap changes every three months and were unaware their bills can change four times a year.
Almost a fifth of those aged 18 to 34 told the comparison website Uswitch they had never heard of the price cap.
The price cap was introduced in 2019 and it places a cap on the amount energy providers can charge for a unit of energy.
It does not set a maximum price they can charge for energy bills. But 45 per cent of those asked by Uswitch wrongly believe the price cap will be the maximum amount their bills will be.
There is also confusion around how often the energy cap changes, in part because the regulator has changed how this works. Until last October it changed every six months but it was then changed to be updated on a quarterly basis.
But 28 per cent of those asked by the website said they thought the cap was still updated twice a year. One in 10 of those asked said they thought the cap changed once a year and 30 per cent said they didn’t know how often the cap changed.
At the same time, the Energy Price Guarantee (EPG) was introduced, which kept average bills at £2,500. It was brought in to deal with soaring energy bills and many customers were also confused about how it worked and what they would end up paying.
The EPG doesn’t exist anymore and from this October, households will once again see their bills change if they are on an SVT. This change will be based on Ofgem’s price cap and the amount will be announced next week.
‘Suppliers have no incentive to offer better prices’
Richard Neudegg, director of regulation at Uswitch.com, comments: “Next week, Ofgem will announce the new price cap from October 1st, which will dictate the cost of gas and electricity for the start of the winter – the time of year when we start turning the heating on.
“Unfortunately, the price cap alongside other Ofgem rules currently in place have failed to bring about meaningful competition, as suppliers have no incentive to offer better prices to anyone.
“Energy retailers are barred from offering cheaper tariffs specifically to win new customers due to the regulator’s ban on acquisition-only tariffs (BATs), and when suppliers have no incentive to attract new customers – or fear of losing current ones – consumers lose out.
“The price cap system needs reforming in a way that offers protection for households and puts real pressure on suppliers to do better for consumers, both in cheaper rates and customer service.”
