One of the UK's biggest energy providers has launched its first deal for customers at a price less than the Government's cap on household energy bills.
Ovo Energy, which has 4.5 million customers, is offering a fixed 12-month tariff at £2,275. The UK Government's Energy Price Guarantee (EPG), which has been extended by three months to the end of June, currently stands at £2,500 for the "typical" household.
The offer comes as falling wholesale prices have begun feeding through to household bills. Wholesale prices have dropped by more than 80 per cent since their peak last August, but are still roughly triple what they were before the onset of the energy crisis.
Until now, falling prices have have made no change to bills because they were still above the EPG. Only the Government, which has been paying the difference to energy companies to make up the shortfall, has benefitted.
Last month analysts at Cornwall Insight prediced that Ofgem's energy price cap - which in normal times limits what suppliers can charge per unit of energy - will fall to £2,153 a year from July. More recently, analysts at Investec said the cap could go as low as £1,981 per year.
Martin Lewis of MoneySavingExpert said people need to be "very careful" not to jump on a fixed-rate deal because it costs less than they're paying right now.
"Because wholesale rates – the rates energy firms pay – have dropped, it's likely the price cap will drop, and on current predictions that means you'll start paying 20% lower rates than now," he said.
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