Scottish Power is last of the big six to reveal prices under new cap – but switchers could save £330+/yr

As expected, Scottish Power has cut its prices from £1,254/yr for a typical user to £1,178/yr, just £1 under the new cap set by regulator Ofgem. Yet this ISN'T the maximum anyone will pay, as the price cap places a maximum charge on the rate you pay for gas and electricity – use more and you'll pay more.

While the reduction will save 930,000 customers on its standard tariff around £76/yr from Tuesday 1 October, this is small fry compared to the £330+/yr most could save by switching to the cheapest deals on the market, even after the cut.

Guy Anker, deputy editor of MoneySavingExpert.com, said: "Standard tariffs from the biggest firms continue to be massively expensive compared with the market's cheapest deals. You were being ripped off before the price cap, you're being ripped off now and you'll still be ripped off when the cap drops. Ensure you're on the cheapest deal and do not sit on your hands while on your energy provider's standard tariff, as you are being fined for apathy."

See how much more you could save on your energy bills by doing a quick full-market comparison via our free Cheap Energy Club.

How are big six prices changing?

All of the big suppliers have now revealed their new pricing under the price cap and, as expected, have all reduced their standard tariff rates to within a few pounds of the maximum allowed. Here are the costs of an average big six standard tariff from 1 October, based on typical use:

• British Gas: £1,177/yr

• E.on: £1,177/yr

• EDF: £1,177/yr  

• Npower: £1,178/yr

• Scottish Power: £1,178/yr 

• SSE: £1,178/yr

You can save £330+/yr by switching

If you're on a standard or default tariff, you'll still be hugely overpaying when the new rate kicks in. You're free to switch away at any time as suppliers can't charge you exit fees if you're on this type of tariff.

And it's a good time to switch as there's a price war raging among the big six energy firms. They have slashed prices and can only be beaten on price by a few small firms, which we know many don't want to switch to.

See how their tariffs stack up with our Cheap Energy Club 'big name' comparison, or you can do a full market comparison if you want the absolute cheapest deals – where average savings of £330+/yr are possible.

So how does the price cap work?

The cap limits the maximum amount suppliers can charge for each unit of gas and electricity you use, and sets a maximum daily standing charge (what you pay to have your home connected to the grid).

Currently, someone who uses a typical amount of energy on a standard or default tariff pays a maximum of £1,254/yr on average, but that is set to fall to £1,179/yr from Tuesday 1 October.

The price cap is reviewed twice a year, with changes coming into effect in April and October. It's set to remain until 2020, after which Ofgem will recommend on an annual basis if it should continue up to 2023.

While your rates will fall from October if you're on a standard or default tariff, your provider may not cut your direct debit immediately. And of course, if you use more energy than usual, what you pay will reflect this.

Why are prices falling?

According to Ofgem, wholesale energy prices – what suppliers pay for gas and electricity – have fallen significantly this year, due to lower-than-usual demand for gas in the colder months, as well as healthy supplies and reserves of gas.