In August, Ofgem announced that the price cap level would increase to £3,549, constituting an 80% increase in bills for average households from the previous cap level of £1,971.
Recognising the financial pressure that this would put UK households under, the government announced an Energy Price Guarantee that would see the cap frozen at £2,500 for two years - this cap level is still significantly higher than the prices customers were paying last year, but not as high as the wholesale energy market was dictating.
As part of his Autumn Statement, the Chancellor of the Exchequer, Jeremy Hunt, has announced that the Energy Price Guarantee will increase to £3,000 per year for average use households paying by Direct Debit for 12 months from April 2023.
The Energy Price Guarantee was introduced in October 2022 and saw typical energy prices - effectively the level of the energy price cap - frozen at £2,500 per year instead of rising to £3,549.
Additionally, the Chancellor announced a new set of cost of living payments designed to help the most vulnerable, including £900 for those on certain means-tested benefits, £300 for pensioners and £150 for those on disability benefits.
Those using alternative heating methods, such as heating oil, will receive a £200 payment.
The normal caveats about the price cap figure still apply here.
It’s important to remember that this is a cap on the unit rate of the energy you use - it is not a cap on your final bill. The less energy you use, the less you will pay - so you can still save money on your energy this winter. If you use more than £2,500 worth of energy, you'll pay more than £2,500.
Additionally, the £2,500 is indicative of an average use household paying by Direct Debit - not a blanket figure for everyone.
In the table below, we've listed the Energy Price Guarantee's average unit rates with standing charges.
Electricity | Gas | |
---|---|---|
Standard variable tariff unit rates | Limited to 34p per kWh (inc. VAT) | Limited to 10.3p per kWh (inc. VAT) |
Fixed tariff unit rates | Reduced by 17p per kWh | Reduced by 4.2p per kWh |
Standing charges | 46p per day | 28p per day |
And in the second table here, we've listed the region-specific rates and standing charges under the Energy Price Guarantee.
Region | Gas | Electricity |
---|---|---|
Eastern | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 35.07p per kWh Standing charge: 38.94p per day |
East Midlands | Unit rate: 10.19p per kWh Standing charge: 28.49p per day | Unit rate: 32.97p per kWh Standing charge: 45.77p per day |
London | Unit rate: 10.50p per kWh Standing charge: 28.49p per day | Unit rate: 35.81p per kWh Standing charge: 33.16p per day |
Midlands | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 33.71p per kWh Standing charge: 49.15p per day |
Northern | Unit rate: 10.19p per kWh Standing charge: 28.49p per day | Unit rate: 32.24p per kWh Standing charge: 49.93p per day |
Northern Scotland | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 33.08p per kWh Standing charge: 51.07p per day |
North West | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 33.50p per kWh Standing charge: 43.26p per day |
North Wales & Mersey | Unit rate: 10.40p per kWh Standing charge: 28.49p per day | Unit rate: 36.02p per kWh Standing charge: 48.6p per day |
Southern | Unit rate: 10.50p per kWh Standing charge: 28.49p per day | Unit rate: 34.23p per kWh Standing charge: 44.41p per day |
South East | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 35.28p per kWh Standing charge: 42.68p per day |
Southern Scotland | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 33.81p per kWh Standing charge: 50.66p per day |
South Wales | Unit rate: 10.40p per kWh Standing charge: 28.49p per day | Unit rate: 34.02p per kWh Standing charge: 49.17p per day |
South Western | Unit rate: 10.40p per kWh Standing charge: 28.49p per day | Unit rate: 33.81p per kWh Standing charge: 52.64p per day |
Yorkshire | Unit rate: 10.29p per kWh Standing charge: 28.49p per day | Unit rate: 33.08p per kWh Standing charge: 49.55p per day |
While this is a better outcome for customers than the mooted increase to £3,549, bills will still be higher than they were this time last year. It’s understandable, then, that you might be wondering what your options are.
The Energy Price Guarantee means different things for fixed tariff customers depending on the unit rates they fixed at.
If you're on a fixed tariff with unit rates below the Energy Price Guarantee: | You'll be able to stay on these rates until your fixed deal ends, at which point you'll be rolled onto your supplier's standard variable tariff at the Energy Price Guarantee unit rates (fixed for two years from 1 October 2022) |
---|---|
If you're on a fixed tariff priced between £2,500 and £3,550 per year at typical consumption: | You'll receive unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas to bring your prices back down to £2,500 at typical consumption |
If you're on a fixed tariff priced above £3,550 per year at typical consumption: | You'll receive the full discount of 17p for electricity and 4.2p for gas. However, given the higher starting point, your fixed rate tariff will still have a unit rate that is above the Energy Price Guarantee unit rates |
The Energy Price Guarantee will be automatically applied to your energy unit rates, which will mean that the money on the meter will last longer than otherwise would have been the case this winter.
If you're not connected to the grid (for instance, if you live in a park home or on a heat network), support via the Energy Bill Relief Scheme (introduced for businesses and non-domestic customers) will be provided to the business which has the relationship with the energy supplier. This benefit will then be passed on to customers and enforced via legislation.
You don't need to do anything to receive this support.
Households which are connected to the electricity network but use fuels other than gas for heating will still receive Energy Price Guarantee support for electricity costs.
Some households may not be eligible for heating costs support through the Energy Price Guarantee - for example, if they're located in an area that isn't served by the gas grid. In these cases, an additional payment of £100 will be provided to compensate for the rising costs of other fuels, such as heating oil.
You don't need to do anything to receive this support.
Renters who are responsible for their own energy consumption and payments will benefit automatically from the Energy Price Guarantee.
If landlords are responsible for energy contracts, they should pass on the discount regardless of how tenants pay for their energy usage - this will be enforced via legislation.
To keep bills at a manageable level, it’s good practice to get into the habit of saving energy wherever possible. A few simple changes to the way you use energy could positively impact your bills. You can find our energy-saving tips here.
The UK energy market is volatile and probably will be for a few months to come. Find out what the latest developments are and what they mean for you in our round-up.
Learn moreInformation on the energy price cap set by Ofgem, including the frozen Energy Price Guarantee rate of £2,500, which came into effect in October 2022.
Learn moreGet help paying your energy bills. Options for those struggling - find out if you are eligible for an energy grant or a rebate on your energy bills.
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