Energy Price Cap - Robinsons London

Energy Price Cap

August 30, 2022 Support 0 Comments


On the 26th August the energy price cap was announced, and goes up again by 80% from 1st October 2022 for 24 million people in England, Scotland and Wales.

If you’re on a default tariff and pay by direct debit, your bills will increase by £1,578 a year to £3,549. If you’re a prepayment customer, your payments will rise by £1,591 a year to £3,608.

The cap sets the maximum amount that energy suppliers can charge for each unit of energy. The figure reported is for an average home, so you could end up paying more than this, for example, if you have a large home or use more energy than a typical household.

Rough calculations equates to approximately £300 per month for typical households.

Below we run through the common questions about how it affects you, and what if anything you can do about it.


What is the energy Price Cap?

Introduced by market regulator Ofgem in 2019, the energy price cap sets the maximum amount that energy suppliers are permitted to charge per kWh of gas and electricity

For electricity, the unit rate per kilowatt hour (kWH) at the moment is 28.3p but under the October cap it will be 51.8p. The electricity standing charge will go up from 45.3p a day to 46.3p.

For gas, the unit rate per kWh is 7.4p under today’s cap but will rise to 14.8p in October, with the daily standing charge moving from 27.2p to 28.4p.

Ofgem calculates the cap with reference to the wholesale price of energy on international markets – the price paid by energy suppliers for the fuel they deliver to our homes. The cap is designed to allow them to recoup their costs. It also allows for them to make a profit of 1.9%


How does the energy price cap work?

The cap limits the amount that a supplier can charge for their default tariff. It includes:

  • The standing charge (a fixed daily amount you have to pay for energy, regardless of how much energy you use).
  • The price for each unit of electricity and gas (measured in pence per kilowatt hours, or p/kWh).


Is there an energy price cap for businesses?

Simply put, no. The Ofgem price cap applies to domestic properties in England, Scotland and Wales, and there is no equivalent for commercial energy users. Contract prices in the business energy market are reported to be rising, in some cases, by a factor of 10.

Northern Ireland has its own regulatory regime for domestic energy provision, and does not have a price cap.


Why is the price cap now every three months?

Ofgem recently decided to review the price cap every three months, instead of every six months. It’s doing this to allow energy companies to adjust bills more quickly in response to the prices they’re charged by wholesale suppliers. This should stop more energy companies going bust.

The next change will be in January 2023 when a further expected increase could take the cap up to an eye-popping £5,386, according to analyst Cornwall Insight’s predictions.

It is then forecast to hit £6,616 in April next year before edging back to around £5,900 by the year end.

Below is a list of the historical price caps.

What is ‘average’ consumption?

The cap references typical households with average consumption over the course of a year. This means a 2-3 bedroom property using 12,000 kilowatt hours (kWh) of gas and 2,900 kWh of electricity per annum.

If you look at a recent energy bill, it will show you have many kWh you are using. Remember, the cap doesn’t limit bills, so the more you use, the more you’ll pay.

Remember, you also pay a standing charge for gas and a standing charge for electricity. This is a fixed amount per day, regardless of how much energy you use – even if you don’t use any.


Am I protected by the energy price cap?

The energy price cap does not apply to every energy customer.

It does apply if:

  • You’re on a default energy tariff, regardless of how you pay your bills.

A default energy tariff, according to Ofgem, is the most basic tariff an energy supplier offers. The most common type is a ‘standard variable’ tariff. This means the amount you pay is subject to price changes, although your supplier should write to confirm any changes with a notice period. A standard variable tariff can’t be higher than the price cap.

Energy suppliers have different names for their default tariffs. If you aren’t sure what tariff you’re on, your energy supplier will be able to tell you.

The price cap does not apply if:

  • You’re on a fixed-term energy tariff (ie a tariff with a fixed end date).
  • Your tariff is exempt from the price cap, for example, some green and special time of use tariffs.

If you’re unsure what tariff you’re on, check your energy bill or contact your energy supplier. If your supplier has recently gone bust and you were moved to a new supplier, it’s likely you’re on a standard variable tariff. Similarly, if you’ve come to the end of a fixed term contract, or are about to, it’s likely you’re on a standard variable tariff or will be moved to one.


Can I get help to pay my energy bills?

We know that for many households, the increase in the energy price cap will be worrying news. At Energy Saving Trust, we’re here to help. Millions of householders are already saving energy and money by following our tips and advice.

As part of a package of support from the UK Government, all households will get £400 off their bills from October, with monthly payments over six months from October to March 2023.

Under the Energy Bills Support Scheme, all domestic electricity customers in Great Britain will get £400 credit automatically added to their accounts during the six months starting from October. If you are on a prepayment meter, £400 will either be added to your meter balance or paid in vouchers.

Whether you’re a homeowner, a private or social renter, there are many things you can do.

Energy Savings Trust have published a list of small changes and tips below to show you how you could save up to £375 a year* on your bills


energy price cap


England, Scotland and Wales savings are for a typical three-bedroom, gas-heated home in Great Britain, using a gas price of 7.4p/kWh and electricity price of 28.3p/kWh (based on April 2022 price cap). Water savings are based on average occupancy. This household is projected to spend a total £1,970 on energy annually, including standing charge.


What can I do about my energy bills?

Energy bills are so high, sadly, there is little we can do about it. But making an effort to use less energy can at least chip away on overall costs.  (See above)

Getting a smart meter installed, which is free-of-charge from your energy supplier, can help you keep track of the energy you are using. Or a simple energy monitor could also do the trick. You can then at least identify the main culprits when it comes to which appliances burn the most money and make the relevant adjustments.


What happens if I can’t pay my energy bills?

If you are finding yourself struggling to pay your energy bills, first, contact your energy supplier.

Under Ofgem rules it must offer a payment plan that reflects what you can reasonably afford. If you are on a prepayment meter and can’t top up, you can request emergency credit.


Price Cap Timeline

Below is a history of previous price caps

  • 1 January to 31 March 2019. The first cap level was set at £1,137 a year (existing prepayment cap remained at £1,136 a year)
  • 1 April to 30 September 2019.Cap increased to £1,254 a year (prepayment to £1,242 a year)
  • 1 October 2019 to 31 March 2020. Cap fell to £1,179 a year (prepayment to £1,217 a year)
  • 1 April 2020 to 30 September 2020. Cap fell further to £1,162 a year (prepayment to £1,200 a year)
  • 1 October 2020 to 31 March 2021. Cap fell further still to £1,042 a year (prepayment to £1,070 a year)
  • 1 April 2021 to 30 September 2021. Cap increased to £1,138 a year (prepayment to £1,156 a year)
  • 1 October 2021 to 31 March 2022. Cap increased further to £1,277 a year (prepayment to £1,309 a year)
  • 1 April 2022 – 30 September 2022. Cap increases further still to £1,971 a year (prepayment to £2,017 a year)
  • 1 October 2022 – 31 December 2022. Cap increases further still to £3,549 a year (prepayment to £3,608 a year)
  • 1 January 2023 – 31 March 2023.The figure is unknown as yet, but analysts are forecasting a cap in the region of £5,300, with a further increase in April 2023.


If you have any questions on the energy price cap, speak to the Robinsons team