Hundreds of thousands of households and small businesses are expected to save on their electricity bills with the introduction of a new government-enforced price limit.

The Australian Energy Regulator sets caps for what power giants can charge customers on default standing offer contracts.

The new lower price begins from July and will result in savings of up to $116 for households and $441 for small businesses.

It will apply for customers in NSW, south-east Queensland and South Australia.

Regulator Clare Savage said $65 million in bill savings would be shared among some 727,000 customers.

“The default market offer is not designed to be the most competitive deal but rather it is a safety net for customers who don’t or can’t shop around when it comes to their electricity contract,” she said.

“Most retailers have cheaper energy deals on offer, so shopping around remains the best way to get a better price.”

The other type of power bill is a market offer, where prices are set by energy retailers and discounts are often advertised.

But the prices can change at any time.

Federal Energy Minister Angus Taylor introduced default market offers in 2019 to bring down power bills.

“As we bounce back from the COVID-19 pandemic, low energy prices will help drive our economic recovery by boosting the spending ability of households and businesses,” he said.

-AAP