What you need to know about the energy price cap increase

Hayley Tearall


Digital Content Producer


Information and support surrounding the energy price cap increase. 

Today Ofgem has announced a new energy price cap increase, which will come into effect from 1 October. Here’s what you need to know about the increase and the support available.

What is the new energy price cap amount?

As of Saturday 1 October, the average household will now pay £3,549 a year if you pay by Direct Debit. The average prepayment customer will pay £3,608.

This is an 80% increase on current levels. You may be charged more or less than this amount, as the amount is based on average household energy usage.

The energy price cap is a limit on the maximum amount an energy supplier can charge, including the standing rate and per unit of energy used. The energy price cap is calculated by the UK Government energy regulator, Ofgem. It applies to anyone not on a fixed rate tariff (i.e. if you’re on a standard variable tariff and pay either by Direct Debit or Standard Credit, usually quarterly).

The energy price cap exists to make sure customers are made aware of any price increases ahead of time, allowing them to better prepare. It was set up by Ofgem in 2019 and is usually adjusted twice a year, although this has recently changed, and will now be adjusted quarterly. The next review is planned for January 2023, when it is expected to rise further.

Please note: the energy price cap only applies in England, Scotland and Wales. Northern Ireland regulates energy costs differently.

What does the energy price cap increase mean for me?

The increase in the energy price cap means that, this winter, energy bills are expected to increase substantially.

Do I need to do anything?

It’s unlikely that you will need to do anything. If you’re already on a tariff covered by the energy price cap, you are unlikely to find many better value tariffs elsewhere. However, it’s always worth keeping up to date with your energy use and comparing options to make sure you’re getting the best price.

While it’s unlikely to be beneficial to switch providers at this time, it may be worth considering a fixed tariff (instead of variable) with your current energy provider. Martin Lewis, Money Saving Expert, has some helpful information about how to know if alternative energy deals are worth it or not.

If you don’t know what tariff you’re on, Citizens Advice can help. They can provide information about how to find out what tariff you’re on, how to switch tariffs, and how to know which tariff might be best for you. Ofgem also has advice on how to switch tariffs as well as sharing Ofgem-accredited price comparison websites.

When will things get better?

Unfortunately, the next energy price cap increase in January 2023 is expected to be even higher, at around £4,649.72 for the average household. In April 2023, the cap could be as high as £5,341.08 per year.* That’s why, if you’re struggling, it’s vital that you reach out for support now.

However, although expected to remain high, the energy price cap is expected to fall later in 2023.

*Forecast from Cornwall Insight analysts

I want to help. What can I do?

If you’re looking to help, there are a couple of things you can do:

Write to your MP

With a new Prime Minister on the horizon, we’re calling on the UK Government to take urgent action to make sure those facing hardship are not forgotten in the coming weeks and months. Please join us in asking the UK Government to keep the cost of living crisis at the top of their to-do list by writing to your MP.

Donate

If you’re in a position to do so, will you make a donation towards the life-transforming work of CAP today? Your gift could empower people in debt and poverty, helping them stay afloat during this cost of living crisis and energy price cap increase.

About Christians Against Poverty

Since CAP began in 1996, our free, professional debt help and community groups, based in local churches, have offered a supportive community for people to find work, gain vital life skills and money management skills, and become debt free.