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Price Cap Explained

Price cap explained

On 23 November 2023, Ofgem announced its next quarterly update to the energy price cap. For the period 1 January to 31 March 24, the energy price cap will increase by 5% to £1,928 for a typical dual fuel household* paying by Direct Debit; an increase of £94 over the course of the year – around £7.83 a month. This price increase is driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, such as the conflict in Ukraine.

Price Cap and Energy Price Guarantee (EPG)

The Ofgem price cap and the EPG work together to protect consumers.  Due to soaring energy costs last year, the EPG temporarily applied a discount to reduce household bills.

What does this mean for Pay As You Go (PAYG)?

To ensure that customers with a prepayment meter pay the same or less for their energy than those who pay by Direct Debit, the EPG will continue to be applied to Pay As You Go prices from 1 January until 31 March 24. This means the annual bill for a typical dual fuel household* who pay by Pay As You Go will be £1,917*.

What is the energy price cap?

The energy price cap sets a limit on the amount that energy suppliers can charge you for each unit of gas and electricity, and also sets a maximum daily standing charge.

  • While your energy bill can still go up or down depending on how much gas and electricity you use, the price per unit and standing charge will never go above the cap. A price cap applies regardless of how you pay.
  • Ofgem, the energy regulator, is responsible for setting the price cap every three months with any changes taking effect on the 1st January, 1st April, 1st July and 1st October each year.
  • Once set, suppliers cannot charge more than the relevant cap per unit of gas and electricity.
  • Ofgem base their calculations on the costs that energy suppliers face such as wholesale energy costs, the costs of building and maintaining the energy network, operating costs and environmental policy costs.

Will the energy price cap affect you?

If you are on one of our standard variable or default tariffs or are a PAYG customer with a prepayment meter, then the energy price cap will automatically apply. If your prices need to increase as a result, there’s no need to contact us. We’ll write to you by letter or email to let you know what your new prices will be  before the change takes place.

If you are on one of our fixed price or flexi tariffs, the price cap does not apply for the duration of the tariff. Check a recent bill or your online energy account if you’re not sure what tariff you’re on.

The price cap only applies to domestic customers.

Is additional support available?

If you need more support, we’re here to help. Please read more about the help and support available to you here.

Our phone lines are very busy so if you have a question, please get in touch via webchat (7 days per week 7am – 11pm) – it’s one of the fastest ways to contact us.

*A typical dual fuel household is defined as one that uses 11,500 kilowatt hours of gas a year, and 2,700 kilowatt hours of electricity a year.

Last updated: 27 November 2023

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