MILLIONS of people will pay less for their gas and electricity from this month, thanks to the introduction of an energy price cap. But there is widespread confusion about what it is and who will benefit.

According to energy switching website Weflip, although half of consumers are aware of it, only a quarter understand how it will work and just one in 20 know how much it could save them. The remainder are completely in the dark.

The cap, which came into effect on January 1, applies to the price per kilowatt unit suppliers can charge for gas and electricity.

Energy regulator Ofgem says it means that the typical dual-fuel customer paying by direct debit will receive an annual bill of no more than £1,137.

It estimates this will save them £76 a year, while those using the most expensive suppliers could be as much as £120 better off.

But as the cap is on the unit price, and not total bills, heavy consumers will continue to pay more than lower users and many people will not save anything at all.

This is because the cap only applies to the 11 million households who, because of misplaced loyalty, inertia or lack of knowledge, are on their providers’ costly standard variable tariff.

Millions more who have gone in search of a cheaper deal, such as a fixed rate, and those who prepay their gas and electricity will not benefit.

And the cap has not been set low enough to turn previously uncompetitive standard tariffs into good value.

Sally Jaques, head of energy at Weflip, said: “It’s clear from our research that cutting energy bills is going to be a top priority for many households in 2019, with most people looking for savings of almost twice the amount that the new energy price cap is predicted to bring.”

Gillian Guy, chief executive of charity Citizens Advice, said: “The introduction of this cap will put an end to suppliers exploiting loyal customers.

“However, while people on default tariffs should now be paying a fairer price for their energy, they will still be better off if they shop around.”

According to price comparison site Compare the Market, customers who switch to a cheaper deal or supplier typically pay £921 annually on a dual-fuel, fixed-rate tariff – £216 less than the average standard price expected under the cap.

This gap could soon widen. Energy firm Centrica says it will apply for a judicial review of the cap on the basis that Ofgem has set it too low.

Regardless of the outcome, the regulator is committed to checking it in April and October every year, and experts predict it will be increased at the first opportunity, to reflect recent rises in wholesale gas and electricity prices.

People are often nervous before switching supplier for the first time, but most find it quick and straightforward.

Whether you are on a standard or other variable tariff, or a fixed-price option that is nearing its end, the simplest way to find a better deal is via an online comparison service, such as the ones run by Citizens Advice, consumers’ organisation Which? and a wide range of other providers.

You will need details of your current deal and annual consumption from recent bills or your online account. Type these into your chosen site to see a list of options and the savings they represent.

To make a switch, follow your chosen link and everything should happen automatically with no interruption to your supply.

Ms Guy said: “People can also make longer-term savings by improving the energy efficiency of their homes. Simple steps, such as better insulation or heating controls, are a good place to start.”

According to the Energy Saving Trust, making small changes to the way you use energy around your home could save around £230 a year.

Turning down the thermostat by one degree could reduce costs by £75 a year, while programming heating and hot water to be on only when needed could save a similar amount.

Leaving electrical equipment on standby wastes money as devices use power even when not in use. Switching them all off at the wall could cut costs by £30. Replacing halogen lightbulbs with LEDs could cut annual electricity bills by a further £35 while boiling only the amount of water needed in the kettle, spending a minute less each day in the shower, and doing one less wash a week might save another £18.