How will the energy price freeze be implemented?

The energy price freeze will be implemented automatically by suppliers when they calculate your bill - there's no need for customers to do anything or speak to anyone to ensure they benefit from the price freeze.

Will energy prices come down?

While the price of wholesale gas may fall, prices for customers have been frozen at £2,500 per year for two years - whether wholesale prices fall enough that customers' prices are brought down as well remains to be seen.

Do businesses get an energy price freeze?

Business energy is not capped, so there was a danger that many smaller companies would bust if their energy issues were not addressed. However, an equivalent scheme will be put in place (details to be announced) for six months to help them through the winter, after which the long-term situation will be addressed.

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Energy Price Guarantee - what does it mean for you? - Uswitch

What does the Energy Price Guarantee mean for you?

Written by Ben Gallizzi, Senior Content Editor - Energy and Electric Vehicles

September 22, 2022

The government has today announced that energy prices will be frozen at £2,500 per year for average use households for two years as it looks to support households struggling with the rapid increase in energy bills over the past year as a result of the volatile wholesale energy market.

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Woman working out effect of price freezes

What’s happened?

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 has now announced an Energy Price Guarantee that will 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.

What does this mean for customers on standard variable tariffs?

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.

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.

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

What about other customers?

Customers on prepayment meters

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.

Customers who aren't connected to the grid

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

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.

Customers who rent

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.

What can you do now?

man at home looking concerned at his laptop

Switch your other services

While energy switching is largely unavailable, one way you may be able to save money is by switching the other services that you get, such as broadband and mobiles.

Reduce your energy usage

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.

FAQs

The obvious benefit of the energy price freeze is that energy prices won't increase to the previously-announced price cap level of £3,549, which will ensure that millions of households are put under less financial pressure this winter than they would have otherwise been.

Additionally, from a regulatory point of view, the Energy Price Guarantee should provide time to fix the longer-standing energy industry issues that have led to this point.

The main risk associated with the energy price freeze is the way it's paid for - at the moment, we don't know whether the costs will eventually be paid by customers, even if takes years. Details of how the scheme is being paid for are yet to be released.

Additionally, though prices have been frozen, households are still paying much more for their energy this winter than they were paying last winter.

What does the Energy Price Guarantee mean for you?

Written by Ben Gallizzi, Senior Content Editor - Energy and Electric Vehicles

What’s happened?

What does this mean for customers on standard variable tariffs?

What does this mean for customers on fixed tariffs?