If you are looking to reduce your energy bills in 2022, it is worth understanding the energy price cap and how it works. This is set by government energy regulator Ofgem, which regulates the UK energy market for gas and electricity, and it is intended to protect consumers against rising energy prices. If you are on a fixed-rate energy tariff, you will be unaffected by the energy price cap. However, for those of us on standard variable tariffs (SVTs), it is important to keep a close eye on the energy price cap when it is set twice a year. Allow us to cover some further details on what the energy price cap is and how it will affect you.
What is the energy price cap?
- In simple terms, the energy price cap is the maximum amount that energy suppliers are allowed to charge per kWh of gas and electricity per year.
- Decided by Ofgem, this is changed twice yearly, on 1 April and 1 October and is calculated based on the average household’s energy consumption.
- The cap is calculated by looking at the general cost of energy, network costs such as the maintenance of pipes and wires, government policy costs, and operating costs including billing and metering services, as well as VAT.
- Depending on how much energy your household uses, your bill will be price capped at a different amount, including a standing charge. This is a fixed daily amount charged no matter how much energy you use.
- You should bear in mind that the energy price cap does not limit your bill, it just caps the price you pay per unit. This means that the amount of energy your household consumes will still determine your overall costs.
How does it affect you?
The most recent energy price cap put in place on 1 October 2021 was set at £1,277 a year. This affected around 15 million households in the UK, with 11 million on default energy tariffs and a further 4 million on prepay meters who were subjected to cap increases at a slightly higher level of £1,309. Fixed-rate tariff customers will not need to worry about the energy price cap until the end of their contract.
Ofgem has made efforts to make the customer switching experience straightforward so that you are able to change to a tariff that is more suitable for your household, with a suitable cap level so you can save money as a result. So whether you think a fixed, variable, or dual fuel tariff may be suitable for your home, you can find any guidance on the options on the Ofgem website.
It is worthwhile to look into switching your gas or electricity supplier to further reduce energy costs, so we recommend using comparison sites to find the best energy deals. Another thing that can affect your energy bills is the efficiency of your heating systems, so will want to take care of your boiler or consider a more energy-efficient system. Here at Platinum Plumbers, our expert engineers can assist in the installation or repairs of your boiler to help reduce your energy bills. If you would like to find out more about our heating services, give us a call today on 020 8855 0361 or email .
