What is the energy price cap, and how does this affect me?
19 April 2023
The energy price cap is currently a very popular topic. It affects the majority of us and impacts on our energy bills.
Whether you’re on pay as you go or you’ve prepaid, the energy price cap will affect you.
However, if you’re on a fixed-term tariff, the energy price cap will not affect you as you have already agreed upon a fixed payment with your supplier. Yet, once this ends, you’ll be moved to a default tariff, meaning that you’ll also be affected.
What is it?
Ofgem, the UK’s energy regulator, introduced the energy price cap in 2019 to protect those who were paying too much on their energy bills when they needn’t be.
Particularly, it was for those who didn’t shop around for the cheapest supplier, causing them to overpay on their energy use.
How does it work?
Ofgem reviews the cap twice a year, usually in April and October. The cap limits the amount of money that suppliers can charge for their default tariffs.
This type of tariff is the most basic price that a supplier offers. It includes a standing charge, which is the fixed daily amount you have to pay for your energy regardless of your usage. It also includes the price for each unit of energy (gas and electric) that you use.
The cap also sets the maximum daily amount that the supplier can charge you to ensure that they are not overcharging.
However, as the cap is based on the standing charges and unit rates of gas and electricity your household uses, this means that the more energy you use, the higher you’ll be charged.
Since last year, Ofgem have announced that they will be checking the cap every 3 months, rather than every 6, to keep an eye on the current increase in wholesale energy prices.
What is the current energy price cap?
Currently, the price cap has dramatically increased, raising our bills to significantly higher amounts for some as most suppliers have shifted their rates to the maximum allowed.
The Money Saving Expert has an easy-to-read table to illustrate when and how much the price has increased since October 2021.
The current rate shows that the cap has increased by 54%, making the average annual bill £1,971 a year*. This is an increase of £693 a year**.
From the 1st October to 31st December, it’s been confirmed that the cap will be up 80%*, which is an increase to £3,549 a year.
Due to the new changes in the energy cap check, the regulator has stated that the cap is set to increase every 3 months: January, April, July and October. This is to ensure a true reflection of energy prices.
What does this mean for you?
Whilst energy prices are increasing, there are a lot of things you can do to save on your energy usage in your home.
From using a smart meter to track your usage to simply bleeding your radiators, there are loads of small things you can do to keep your energy costs down. You can read our blog for more simple tips here.
What’s more, if you’re a business and want some helpful tips for how to save energy, read our blog here.
How Swale Heating can help
As always, it’s important to have a central heating system that is highly efficient. A boiler with an A-rated energy efficiency rating will not only decrease your carbon footprint, but will save you money on your bills.
To ensure that your boiler is properly and safely maintained, you can sign up to one of our boiler cover or service plans. By regularly servicing your boiler, you can be safe in the knowledge that it is working to its full capacity.
If there are any issues, these will be flagged, which can then be resolved quickly to ensure that any issues don’t worsen. If any problems with your boiler are left unnoticed, this can become extremely costly and inconvenient. Read about our boiler cover and service plans here.
You can also get a free, no obligation one quote for a new boiler here, or feel free to call us on 0800 731 3344.
What’s more, our Gas Safe engineers are also MCS certified, meaning that they are experts in the installation of renewable systems. We offer a range of renewables, from solar PV to air source heat pumps. Have a read about our renewable solutions here.
Swale Heating are here to help if you’re looking to install, maintain or repair your central heating system. This ensures you don’t waste any energy, keeping your bills as low as possible. Rely on us to keep you warm.
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