Energy Price Cap

With the energy crisis in full swing and the government having to step in to cap energy prices people are understandably getting confused with the situation. I have seen a few people asking ‘is my bill going to be capped at £2,500?’ (the new average energy price guarantee from 1st October 2022) but sadly this is not the case.

It is important to realise that this is just an average figure per household when they are being charged at the new rate of the unit price cap. The government website describes it as follows:

A new Energy Price Guarantee

The Energy Price Guarantee will reduce the unit cost of electricity and gas so that a typical household in Great Britain pays, on average, around £2,500 a year on their energy bill, for the next 2 years, from 1 October 2022.

So we will still be paying per unit of energy that we use and this is uncapped. The capped amounts are the unit charges for gas and electricity which are as follows for those people who are on a variable rate dual fuel tariff:

Electricity: 34.0p/kWh and 46p per day standing charge

Gas: 10.3p/kWh and 28p per day standing charge

So the more energy you use, the higher your bill will be and it will not be capped at £2,500. This means that you shouldn’t go using as much energy as you like and think that you will not need to pay any more than £2,500 for the year. It is an easy mistake to make due to people calling the £2,500 amount a ‘price cap’.

The rules do get a bit more confusing if you are not on a standard dual fuel variable rate, for example if you use a pre-payment meter (the rates will be slightly different) or if you only have electricity or if you are on a fixed rate tariff.

You can find the full details of the government announcement here, including the help that you will get in paying your bills.