The Energy Price Cap Explained

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    Following a few years of significant marketplace volatility, the most recent energy price cap has brought some respite to domestic consumers across the UK. It’s locked in the amount energy suppliers can charge per single unit of energy at a lower rate until January (2024).

    Although this cap is around £151 lower than it was back in July (2023), it’s still considerably higher than it was back in 2020 – before the energy crisis began. And it’s set to rise again, by 5%, in January.

    What is the current energy price cap?

    The most recent energy price cap was introduced on 1 October and runs until 31 December 2023. It means the maximum amount a typical dual-fuel household paying via Direct Debit can expect to pay will be limited to £1,834 per year.

    Broken down, this means you can expect to pay no more than…

    • 27.35p per kWh for electricity with a daily standing charge of 53.37p per day (including VAT)
    • 6.89p per kWh for gas with a daily standing charge of 29.62p per day (including VAT)

    *Figures rounded to the nearest penny. Based on the average for consumers in England, Scotland and Wales paying by Direct Debit.

    When does the energy price cap change?

    It’s reviewed and changed every three months – this is to reflect wholesale marketplace costs, as well as inflation. The next cap will be introduced at the start of January and will run until March 2024.

    It’s been announced that the maximum price energy suppliers can charge dual fuel customers, paying via Direct Debit, in a typical household will be £1,928. Broken down, this works out at:

    • 28.62p per kWh for electricity with a daily standing charge of 53.35p per day (including VAT)
    • 7.42p per kWh for gas with a daily standing charge of 29.60p per day (including VAT)

    Here’s the schedule for 2024’s energy price cap periods, as well as when we can expect the cap level to be announced for each period:

    Price Cap Period Announcement Date Wholesale Price Assessment Period
    1 April to 30 June 2024 23 February 2024 16 November 2023 to 15 February 2024
    1 July to 30 September 2024 28 May 2024 16 February to 16 May 2024
    1 October to 31 December 2024 27 August 2024 17 May to 16 August 2024

     

    How has the energy price cap changed historically?

    Price Cap Period Price Cap Level
    January 2019 to March 2019 £1,137
    April 2019 to September 2019 £1,254
    October 2019 to March 2020 £1,179
    April 2020 to September 2020 £1,162
    October 2020 to March 2021 £1,042
    April 2021 to September 2021 £1,138
    October 2021 to March 2022 £1,277
    April 2022 to September 2022 £1,971
    October to December 2022*+ £3,549
    January 2023 to March 2023* £4,279
    April 2023 to June 2023* £3,280
    July 2023 to September 2023* £2,074

    *Indicates period where the government’s Energy Price Guarantee (EPG) was used rather than the energy price cap – set to £2,500.
    **Indicates period where the government’s EPG was used rather than the energy price cap – set to £3,000.
    +The energy price cap switched from being reviewed twice a year to once every three months.

    How is the energy price cap calculated?

    Ofgem, the energy industry regulator, is responsible for setting the cap. It calculates the cap based on a variety of different factors – the biggest being wholesale cost, or the amount a supplier pays for the gas and electricity they supply to consumers like yourself.

    However, it also takes into account network costs (for maintenance, operation and implementation of the infrastructure used to supply energy to households), operating costs, VAT, earnings (the profit a supplier is permitted to make), payment method allowances and more.

    When does the energy price cap end?

    The energy price cap which was introduced via the Domestic Gas and Electricity (Tariff Cap) Act 2018 was originally due to end at the end of December 2023.

    However, the Energy Prices Act 2022 saw this date removed, meaning the cap can continue to be extended beyond 2024 if necessary.

    Is there a prepayment meter energy price cap?

    Yes, there is a separate prepayment meter price cap. It’s reviewed on exactly the same schedule as the standard cap. It’s slightly higher – at £1,861 per year for the average UK household on a flexible (standard rate) tariff*.

    As with the standard price cap, it’s worth remembering that if you use more energy, you will pay more – regardless of the cap.

    *Based on Ofgem’s national average consumption rates – 2,700 kWh of electricity and 11,500 kWh of gas.

    Does the energy price cap apply to businesses?

    No, unfortunately, it doesn’t – it only applies to domestic customers. You can read about this topic in greater detail in our guide, ‘Does the Energy Price Cap Apply to Businesses?

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    Let’s save time, can we automatically gather meter information?

    ? What does this mean?
    To get your quotes at lightening speed we need several key pieces of information which can all be found on your electricity bill. But by simply ticking this box, we can search ‘industry held data’ to get your meter number, electricity consumption and current energy supplier. This means that we can get you quick quotes without asking you to dig out all of your paperwork. This is personal data therefore we need you to allow us to access this information.
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