Why am I paying more than the energy price cap?

Many of us have seen the price cap being described over the last 12 months, however the energy price cap has been in place since January 2019.

Originally, the energy price cap was designed to protect consumers who didn’t engage with the energy market and shop around for deals. Many would shop around and find much better deals than the price cap, however for those that didn’t, they were protected from energy suppliers charging them too much.

What are the figures based on?

You’ll no doubt have seen many news outlets describing the price cap as an annual figure for energy prices, the current figure being £1,971 rising to £3,549 (pending the energy price freeze announcement in a few hours) but this rightly confuses so many households. The energy price cap is actually applied to the daily standing charge and the unit rates for your electricity and gas usage and it’s highly unlikely that any two households will pay the same end figure. The figures you see in the news are always based on average or typical usage across the 27 Million homes in the UK.

So why use these figures if all households pay a different amount?

Before the price cap was introduced in 2019, researchers concluded that consumers were often confused with the energy market and how bills are calculated, therefore a picture of the typical household was created. There are 3 typical profiles of low, medium and high use. When you hear of price cap figures, they are usually calculated from a medium use profile.

Usage Property profile People Annual Electricity usage Annual Gas usage
Low Flat / 1 bed house 1 – 2 1,800 8000
Medium 3 bed house 2 – 3  2,900 12,000
High 5 bed house 4 – 5 4,300 17,000

What’s more, there is also a daily standing charge for each fuel (electricity and gas) to calculate.

When you hear about a price cap of around £2,000 rising to £3,500, or the recent price freeze expectations of £2,500 to be announced today, that figure is based on a medium user, including the unit rates for electricity and gas and also including the standing charge rates.

How do I calculate my own expected spend on energy?

The best thing to do is start with your bill in front of you. Most energy suppliers now send bills online, so do check your emails. If you still receive a paper bill, you should find all the information you need there. Start with the part of your bill which is named ‘Personal Projection’. This is an estimate of your next 12 months use and will also give you guidance on what your next 12 months bill cost will look like. If you need more in depth support with understanding your bills, please see this great guide to energy bills.

Keeping your bills as low as you can.

Even with today’s announcement of further help on energy bills, households are still expected to pay more than double on their energy bills compared with 2020. We’ve listed some details about the expected announcement today and also any further help that may be available. Please see here – Energy price freeze and help with energy bills.

We’ve also shared some top tips for you to save energy in your home, please see – energy saving advice and help.



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