Top 7 things about the Energy Price Cap

With the current energy crunch putting a strain on finances for millions of UK households and with the energy price cap announcement due next week, we give you the top 7 things about the energy price cap.

 

  1. What is the energy price cap?

The energy price cap sets a maximum daily amount (what you pay) that energy suppliers in England, Wales and Scotland can charge customers on a standard rate, or default tariff.

If you’re on a fixed rate tariff, the price cap does not apply.

 

  1. Why have an energy price cap?

Introduced in January 2019 and set by Ofgem, the energy regulator, under government strategy. The price cap aims to ensure the millions of UK customers on standard rate, or default tariff are not overcharged.

 

  1. How often does the energy price cap change?

The price cap is reviewed twice a year, in April and October and is known as summer and winter price caps.

 

  1. How much will the energy price cap?

The current cap, set in October last year, is priced at £1,277 a year for a typical household, up 12% on average.

The average rates are currently set at:

  • 4p p/kWh for gas
  • 21p/kWh for electricity
  • A standing charge of 26p per day for gas
  • A standing charge of 25p per day for electricity

This does not mean that everyone will pay this amount. It's the rates that are capped, so the more you use, the more you pay.

It’s worth noting that the price cap is set differently dependent on payment:

  • Direct debit - £1,277 a year on average.
  • Cash, Cheque or quarterly direct debit - £1,370 a year on average
  • Prepayment - £1,309 a year

 

  1. How much will the energy price cap in April 2022 change?

The current price cap ends on 31st March 2022 and an announcement is due 7th February 2022.

Due to the record wholesale prices (what energy suppliers pay), it is predicted that the price cap will rise by 51% to an average of £1,925 a year.

 

  1. How has the energy price cap changed?

Although the energy price cap has remained constant since its introduction in 2019, if estimates are correct, the price cap will result in a 58% hike since 2019.

 

  1. How long will there be an energy price cap for?

When introduced, the cap was set to remain in place until the end of 2020, with an option to extend it on an annual basis until 2023.

The Government extended the price cap until the end of 2021, but has announced its intention to sanction the price cap to be extended beyond 2023 if required.

 

About Energy Angels

Wolverhampton-based Energy Angels make housing associations and social landlord’s substantial savings each year through reduced energy costs and time savings, as well as support them in their own carbon reduction goals.

Any housing associations and social landlords serious about reducing their energy and administration costs should access our void energy management team.

Energy Angels work closely with our housing partners to ensure smart meters are installed in empty properties. If the whole nation got a smart meter, we could save the same amount of energy as it takes to power every household in Aberdeen, Cardiff and Manchester for a year.

Help is available to manage residents' future energy usage and costs and for all void properties, Energy Angels provide a viable renewable energy tariff option in partnership with OVO Energy.