You might have heard about the energy price cap on the news recently. We want to make sure you have all the facts about how the price cap works so you can make an informed decision about your energy.
Every year in April and October, the energy industry regulator Ofgem sets a price cap for standard variable energy tariffs. They do this to help make the price of energy fair for all customers across all suppliers.
This lays out a maximum price that energy companies are allowed to charge their customers, and is based on the cost price of gas and electricity.
This year, wholesale prices of gas and electricity have gone up – and so has Ofgem’s price cap. This means that if you’re on a standard variable energy tariff, your energy bills could increase too.
How much more will I pay?
If you are on a standard variable tariff, the typical bill increase is £117 a year.
If you are on a prepayment meter, the typical bill increase is £106 a year.
The cap is based on the price per unit of energy, not on your total bill. So if you use more energy, you could see more of a difference.
How can I lower my energy bills?
The best way to ensure lower bills is to switch your energy tariff, as the ‘default’ or ‘standard’ ones can often be more expensive.
Your energy bills are also based on how much you use, so trying some of our energy saving tips could help too.
It’s important to remember that these prices are set out by an independent regulator, and based on global energy supply costs. So, if wholesale gas and electricity prices fall, you can always trust that we will pass on those savings to you.
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If I switch my tariff, will I have to pay an exit fee?
No. If you are on one of the affected tariffs; standard variable or prepay tariffs, you have the right to end your current contract at any time. No exit fees required.
However, if you have any outstanding charges on your energy account, you will have to pay these before you switch to a new supplier.
Take a look at our FAQs below, or you can click here to get in touch.
Get a quote now to see if you could lower your energy bills.
What are energy price caps?
Ofgem the regulator, has introduced energy price caps to make sure that customers on standard variable tariffs, default tariffs and safeguard tariffs, pay what they deem a fair price for their energy.
When is the next price cap?
Ofgem review’s the price cap every six months and sets a limit to how much energy suppliers can charge for unit rates and standing charge. The next price cap will come into effect on the 1 October 2019.
How are price caps calculated?
Ofgem calculates them based on the latest estimates of cost for each supplier to supply their customers with electricity and gas. This will include the cost of wholesale energy, networks, environmental and social programme and tax.
What are the benefits for you?
Ofgem introducing a price cap means if you are on a standard variable tariff you are always going to be paying a fair price deemed by the regulator. If costs to supply energy fall, the cap makes sure the savings are passed onto you. If the costs rise you can have peace of mind that any price rises we may have to make are justifiable, according to the independently calculated cap.
How much is the price cap?
Ofgem has set the final level of the price cap on gas and electricity at £1,254 per year for a typical dual fuel customer paying by direct debit. £117, from £1,137. Ofgem considers a typical customer to be a medium gas user and medium electricity user. A medium user consumes 12,000 kWh of gas and 3,100 kWh of electricity. Different cap levels will apply depending on how you pay, where you live and your meter type.
Why are my prices increasing?
Ofgem has introduced the cap to a price they believe is fair, we have aligned our costs to the level of the cap in fairness to all our customers.
When will the price increase come into effect?
The price cap comes into effect on the 1 April 2019.
How will I know if I am on a tariff that has been affected by the price cap?
If you are on a standard variable tariff such as:
- Green Pioneer
- Safe and Secure
you will be affected by the price cap. We will begin informing customers from Friday 22 February 2019 and if ou are affected, you will receive a letter clearly highlighting your new personal projection.
What options do I have now?
You have three options:
- Do nothing and remain on your current tariff. Your new prices will come into effect on 1 April 2019
- Select one of our latest fixed-term contracts. Click here to see what's available or call us on 0800 093 7511
- Switch to another supplier. All we ask is that you settle any outstanding bills with us before you leave.
Will the terms and conditions of my tariff be affected by the price cap?
No, the terms and conditions of your tariff will remain the same.
Where can I find out more information on the price cap?
Ofgem, the energy regulator has a lot of useful information on their website regarding the price cap and the reason why. Click here to find out more
Where can I go for free, impartial advice about my energy?
For impartial advice on switching tariffs or supplier, you can visit the Citizens Advice website or call the Citizens Advice consumer helpline on: 03454 04 05 06. You can also save money on your energy bill by following a range of energy-saving tips. For simple, practical advice, you can contact our trained Energy Saving Advisers on 0800 093 7537.