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Blog Post 3 February 2022

What is the energy price cap?

Ofgem has announced an increase to the energy price cap today, having a direct impact on the amount that millions across Great Britain will pay for their energy bills from 1 April 2022. 

The cap is the maximum amount that energy suppliers can charge for their energy.  

Why was the energy price cap introduced?

It was introduced by Ofgem, the body that regulates energy in Great Britain, in January 2019. It followed concerns that many people, particularly those who did not switch supplier to find cheaper deals, were paying too much for their energy. 

Ofgem reviews the cap twice a year, with any changes coming into effect in April and October. The cap will increase from 1 April 2022 for approximately 22 million customers. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year. Prepayment customers will see an increase of £708 from £1,309 to £2,017. 

Am I protected by the energy price cap?

The energy price cap does not apply to every energy customer. 

It does apply if: 

  • You’re on a default energy tariff, regardless of how you pay your bills. 

A default energy tariff, according to Ofgem, is the most basic tariff an energy supplier offers. The most common type is a ‘standard variable’ tariff. This means the amount you pay is subject to price changes, although your supplier should write to confirm any changes with a notice period. A standard variable tariff can’t be higher than the price cap.  

Energy suppliers have different names for their default tariffs. If you aren’t sure what tariff you’re on, your energy supplier will be able to tell you. 

The price cap does not apply if: 

  • You’re on a fixed-term energy tariff (ie a tariff with a fixed end date). 
  • Your tariff is exempt from the price cap, for example, some green and special time of use tariffs. 

If you’re unsure what tariff you’re on, check your energy bill or contact your energy supplier. If your supplier has recently gone bust and you were moved to a new supplier, it’s likely you’re on a standard variable tariff. Similarly, if you’ve come to the end of a fixed term contract, or are about to, it’s likely you’re on a standard variable tariff or will be moved to one. 

How does the energy price cap work?

The cap limits the amount that a supplier can charge for their default tariff. It includes:

  • The standing charge (a fixed daily amount you have to pay for energy, regardless of how much energy you use).
  • The price for each unit of electricity and gas (measured in pence per kilowatt hours, or p/kWh).  

To illustrate what this might look like for an average person, Ofgem uses a figure of 12,000kWh for a household’s annual energy use. This is the figure that you might see in the news. However, this is just a guide to see what the change in price cap does to a typical household’s annual energy bill. Each household will be different as everyone will use a different amount of energy.

Several different factors also affect how much suppliers will charge you for energy under the price cap. These include where you live, how you pay for your energy, as well as the type of energy meter you have in your home. 

The graph below shows current typical running costs for different house types, as well as projected running costs from 1 April 2022. Switch between tabs to find your property type.

Can I get help to pay my energy bills?

We know that for many households, the increase in the energy price cap will be worrying news. At Energy Saving Trust, we’re here to help. Millions of householders are already saving energy and money by following our tips and advice. 

If you’re finding it hard to pay your energy bills, there is help available wherever you are in the UK. Find more information, including support near you

For those looking for ways to reduce how much energy you use at home – and save money on your bills – our quick tips could help

Last updated: 4 February 2022