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Blog Post 14 September 2022 Updated 13 June 2023

What is the Energy Price Guarantee?

The UK Government put the Energy Price Guarantee in place in October 2022 as a temporary measure to replace Ofgem’s price cap. This was to protect households from high energy prices.

Under the Energy Price Guarantee a typical household in England, Scotland and Wales currently pays an average of £2,500 a year for energy.

The guarantee also applies in Northern Ireland, but prices are capped slightly differently, so the price of a typical energy bill is different.

The Energy Price Guarantee is set to go up to £3,000 from July 2023 until March 2024, but it only affects energy bills if it’s lower than Ofgem’s price cap.

Ofgem’s confirmed that from 1 July the price cap will be £2,074 per year for a typical household in England, Scotland and Wales.

How does the Energy Price Guarantee work?

Like the price cap, the Energy Price Guarantee sets the maximum price suppliers can charge households for a single unit of gas and electricity.

And, in common with the price cap, it also doesn’t set a maximum amount for your final bill for the year. The price of your energy bill will still depend on how much energy you use.

According to Ofgem, a ‘typical’ household uses 2,900 kWh of electricity and 12,000 kWh of gas in a year.

If you use more or less than a typical household your bills will vary.

What’s the average unit price for electricity or gas under the guarantee?

If you’re a dual-fuel customer paying by direct debit, the average unit price is currently 33.2p per kilowatt hour (kWh) for electricity and 10.3p per kWh for gas (including VAT).

Does the guarantee apply to fixed tariffs?

Yes. If you’re on a fixed energy tariff, the Energy Price Guarantee protects you in the same way that it protects those on standard variable tariffs.

What if I had fixed my tariff at a higher rate?

If you’re on a fixed tariff and were paying a higher unit rate for electricity and gas than the Energy Price Guarantee maximums, you’ll have seen your unit prices reduced. This was done to match the support for those on variable tariffs.

From 1 July 2023, fixed rate tariffs will go back to the prices they were before the Energy Price Guarantee, so they may go up.

What about standing charges?

The Energy Price Guarantee only applies to unit rates.

Ofgem still sets the standing charges under the price cap. As with unit rates, it’s not a cap on what you pay, but a cap on the maximum amount your provider can charge.

This means that for energy customers paying for variable tariffs by direct debit in England, Scotland and Wales, current standing charges work out at an average of around 53p per day for electricity and 29p per day for gas.

However, standing charges vary by region, so make sure to check with your supplier.

Does the Energy Price Guarantee replace the £400 discount on energy bills?

No, the Energy Price Guarantee ran along this discount, which is called the Energy Bills Support Scheme.

For most households, support from this scheme ended in March 2023. 

Is the guarantee the same if I’m on a pre-payment meter?

If you have a pre-payment meter, the Energy Price Guarantee is applied to the rate you pay for each unit of energy until 30 June 2023.

From 1 July 2023, unit charges for those on pre-payment meters are going to be in line with direct debit customers.

Pre-payment customers will be compensated through the Energy Price Guarantee via a unit rate discount that will only be applied to gas unit rates.

This is because the combined unit rate and standing charge for electricity pre-payment meters will already be less than the equivalent for direct debit. 

Last updated: 13 June 2023