UK households could save on average £302 every year if they switch from the standard variable or default tariff.

That’s according to a new report by the price comparison website comparethemarket, which suggests that the average price for the cheapest available tariffs on the market is £825, significantly lower than the current energy price cap of £1,127 a year.

The research also shows prices in the market have dropped to the lowest level in three years since the introduction of the current price cap level on 1st April.

However, the cheapest fixed-rate or variable tariffs have risen by £20 or 2.4% in the last month.

The analysts also estimate if 11 million standard variable tariff customers switched to a cheaper deal, this could lead to a combined saving of £3.3 billion.

Peter Earl, Head of Energy at comparethemarket, said: “The energy price cap is clearly a rip off compared to the best value deals on the market.

“Whether the regulator decides to raise or lower the cap will not make a significant difference to those households on a standard variable tariff who will continue to pay over-the-odds for their energy.”

A spokesperson from Ofgem told ELN: “People who are protected by the price cap are paying a fair price for their energy. It’s not the best price but it’s a fair price. According to our analysis, loyal customers are always between £75 – £100 better off under the price cap.

“The price cap legislation has set Ofgem two objectives for the price cap – first to protect customers who don’t switch. And we’re doing that.

“The second is to enable competition in the energy market to continue. That means setting the price cap at a level which allows efficient suppliers to offer cheaper deals below the level of the cap for the more than 10 million customers who have switched to fixed deals.”

Ofgem is set to announce the new price cap level on Friday, which would come into place 1st October.