What does the Energy Price Guarantee mean for you?

May 2023 update

Ofgem has announced that the energy price cap level will fall to £2,074 from July 2023. Its level is now lower than that of the Energy Price Guarantee, meaning that it becomes the main system used for calculating the cap on standard variable tariffs' unit rates.

The Energy Price Guarantee will continue to be available in the background if the level of the price cap rises again in the future, but it will now be at a level of £3,000 as opposed to £2,500.

It's worth noting that, even though prices have dropped, energy bills are still higher than they were this time last year, and the £66/67 per month energy support customers have received since October has ended.

For the most vulnerable households, there are cost of living payments available, 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.

But can you switch?

While fixed deals aren't currently available, there's no reason why suppliers can't make bring them back to market in the near future. Make sure your details are up to date by entering your email address below - that way, you'll be ready to act as soon as the deals become available.

What had happened?

2022

In August 2022, Ofgem announced that the price cap level would increase to £3,549 from October, which would have meant 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 price cap level effectively frozen at £2,500 until April 2023, subsidised by the government. This was still significantly higher than the prices customers had been paying, but not as high as the wholesale energy market was dictating.

2023

In February 2023, Ofgem announced that the level of price cap (if it were valid) would decrease to £3,280 from April. Simultaneously, the EPG level was due to rise to £3,000, meaning bills would increase for customers at a time when financial support was ending and wholesale prices were dropping. As a result, the government decided to extend the EPG at the £2,500 level for three more months with the possibility that wholesale prices would drop further by the summer, allowing Ofgem's price cap to take over.

What does this mean for customers on standard variable tariffs?

As far as standard variable tariffs are concerned, the Energy Price Guarantee is now obsolete - the price cap is being used to calculate capped unit rates again, so for average use customers paying by Direct Debit, the price cap level is £2,074 per year.

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. If you use more than £2,074 worth of energy, you'll pay more than £2,074.

In the table below, you can see the energy price cap's average unit rates with standing charges for those on standard credit meters until October 2023.

And in the second table here, we'll list the region-specific rates and standing charges for those on standard credit meters when they become available. At the moment, they refer to the Energy Price Guarantee level fo £2,500.

What does this mean for customers on fixed tariffs?

The Energy Price Guarantee means different things for fixed tariff customers depending on the unit rates they fixed at.

What about other customers?

Customers on prepayment meters

The prepayment price cap has been set at £2,074 until October 2023 and will apply in the same way the standard variable price cap does.

Customers who aren't connected to the grid

Under the EPG:

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.

Customers who use electricity but not gas

Under the EPG:

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.

Under the price cap:

The support will end and electricity unit rates will be capped under the price cap system.

Customers who rent

Under the EPG:

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.

Under the price cap:

The support will end and energy unit rates will be capped under the price cap system.

What can you do now?