UK energy price cap now level with the cheapest deals on the market

Research from Cornwall Insight has shown there is only a £2/year difference between the top ten cheapest energy deals on the market and the Default Tariff Cap.

The gap which is significantly smaller than the £171/year seen in December 2020, stayed stagnant between October and December 2021, further confirming predictions that the forecasted 50% rise in the Default Tariff Cap from April will impact the majority of consumers, with cheaper deals simply unavailable.

James Mabey, Analystat Cornwall Insight said: “Over the past year the gap between the Default Tariff Cap and the cheapest market deals has been slowly decreasing. Our figures from the last quarter of 2021 have shown competition between suppliers has stagnated, with ever-increasing wholesale prices leaving suppliers unable to offer fixed deals below the Ofgem set price.

“These are turbulent times for energy suppliers, only this month we saw Together Energy become the first victim of 2022, following on from nearly 30 suppliers leaving the market in 2021. The Default Tariff Cap, once a protection for customers, with increases matched by cheaper fixed deals as recently as April 2021, has now become the only option available to most, as energy companies try hard to keep their heads above water.

“It is hard to determine whether the gap between delivered costs will fall below the Default Tariff Cap once more. Our current projections show this is unlikely to happen anytime soon, with high wholesale prices showing no evidence of coming down. In the short-term the government has a number of options available through the tax and benefit system to shield consumers from the significant hikes. However, if we want to get a handle on this ever-volatile market, some serious long-term decisions on the future of the Default Tariff Cap, pricing in the wholesale market and where the UK sources its energy from will need to be made.”