What does The Energy Price Cap mean for you?

The Energy Price Cap is the maximum charge suppliers are permitted to make per unit. It was introduced by the UK Government in 2019, and limited further by the Energy Price Guarantee (EPG) in 2022.

In keeping with inflation and changing costs, the cap is updated every quarter, by regulator Ofgem. From January to March this year, The EPG kept annual energy bills down to £2,500, when the cap reached £4,279. The EPG was raised to £3,000 in July, but energy prices since have been lower than this.

The good news is that wholesale energy prices have now dropped. Whilst the price cap remains higher than it was pre-2021, it is now being reduced by 7%, for the period of October to December. This means, for example, if you’re living in a two-three bedroom home, you could save about £160 a month, depending on your location.

Whether or not you benefit from the price cap this winter mainly depends on how your bills are paid. The cap will apply if you are on a default energy or a standard variable tariffs. These include bills paid by direct debit, standard credit, and prepayment or Economy 7 (E7) meters. Helpfully, the EPG means to ensure that prepayment meter costs are close to those paid by direct debit.

If you pay your energy bills by direct debit, you could benefit from checking your meter reading. The fee is based on an estimate of your usage, so if you’re using less than this, you can contact your supplier to make sure you pay less, too.

Many households benefitted from the government’s Energy Bills Support Scheme last winter, with credits between £66 and £67 per month. If you are working out your energy bills for this winter, it is unclear whether discounts will be provided, so it could be worth keeping this in mind.

If you’d like to check what the rates and standing charges for your area will be from October, click here for more information.

Sources:

https://www.gov.uk/government/publications/energy-price-guarantee-regional-rates/energy-price-guarantee-prepayment-meters-regional-rates-and-standing-charges-october-to-december-2023

https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022