Energy Price Cap Explained


The price cap is the maximum amount any supplier can charge you for your energy, affecting default tariffs (often known as a standard variable tariff). The cap applies to both the standing charge and unit prices for gas and electricity. It doesn’t apply to other tariffs your energy supplier might offer, like fixed tariffs, so you might find yourself being charged more than the cap if you’re not on a default tariff.
The cap reflects any changes in the wholesale price of energy to keep prices fair for consumers — that means your bills can go up or down. It also reflects any other underlying costs or increases in inflation. It’s calculated by the Office of Gas and Electricity Markets (Ofgem), the government regulator for the electricity and gas markets in the UK.
Ofgem reviews the price cap every six months, announcing any increases or decreases in February and August each year. Any adjustments then come into effect in April and October — that’s when you’ll see any impact reflected on your bill if you’re on a default tariff and your energy supplier chooses to adjust their prices in light of the cap changing.
Comments
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I feel you should edit what you have written to include:
Its the maximum it can charge for the typical user who uses 2900 kWh of Electricity and 12000 kWh of Gas.
3.795 kWp Solar PV System. Capital of the Wolds3 -
I contacted Ofgem about my 100% Electricity standing charge increase with Octopus. It seems all that has been talked about by MSE is the approx 55% increase in total costs. Look at Ofgem's reply below.
Gas standing charge goes up by 1p per day but electricity standing charge by 20p per day, thats 80%Average price cap unit rates
Customer with typical usage, paying by direct debit*Current price cap period
(1 October 2021 - 31 March 2022)
Next price cap period
(1 April - 30 September 2022
Electricity
£0.21 per KWh
Daily standing charge: £0.25
£0.28 per KWh
Daily standing charge: £0.45
Gas
£0.04 per KWh
Daily standing charge: £0.26
£0.07 per KWh
Daily standing charge: £0.27
*Rates are averages and will vary by region. Contact your supplier for personalised information.
Standing Charges
The standing charge broadly reflects costs that are fixed for each customer. The increase from 1 April is due to a number of reasons.
1) The costs associated with the process for when suppliers exit the market which are split across both fixed and volumetric charges. Half of these fall on the standing charge.
2) Fixed network costs have increased - these relate to fairly distributing costs of maintaining the energy networks, but we expect this increase to benefit consumers overall.
3) Policy costs levied on a per customer basis have increased, such as the introduction of a Green Gas Levy, and also an increase in the costs associated with the Warm Home Discount rebate increase.
We know the Energy Price Cap rise that will apply from 1 April will be extremely worrying for many people. If you are struggling with energy costs, there's practical advice and
information on what you can do and support services in our Help With Bills guide.
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Pentris said:I contacted Ofgem about my 100% Electricity standing charge increase with Octopus. It seems all that has been talked about by MSE is the approx 55% increase in total costs. Look at Ofgem's reply below.
Gas standing charge goes up by 1p per day but electricity standing charge by 20p per day, thats 80%4 -
read the sticky at the top of the page explaining the price cap. All the details ae also on Ofgem's website so I assume you've read all this before complaining to them?1
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Its the maximum a supplier can charge for the typical user who uses 2900 kWh of Electricity and 12000 kWh of Gas. However if you use a different amount of energy to this you may well end up with a higher percentage increase. My percentage increase from April 1 is 63%. I have asked my energy supplier EDF about this. They choose their words carefully, however they have not answered my question as to why I will see a 63% increase from April based upon my historic energy usage. This increase will no doubt be compounded in October by a further increase. This is an even higher increase for some or most by stealth
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Welcome to the forum.MikeRob63 said:My percentage increase from April 1 is 63%.
N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Shell (now TT) BB / Lebara mobi. Ripple Kirk Hill member.
2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 33MWh generated, long-term average 2.6 Os.Not exactly back from my break, but dipping in and out of the forum.Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!0 -
QrizB said:Welcome to the forum.MikeRob63 said:My percentage increase from April 1 is 63%.0
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MikeRob63 said:QrizB said:Welcome to the forum.MikeRob63 said:My percentage increase from April 1 is 63%.Then your numbers make sense.Gas consumption has had a higher percentage rise than electricity, roughly 83% vs 41% so your high gas use shifts your overall percentage higher..The standing charge differences have a relatively low impact on the total compared to the consumption.Just rough numbers using two capped tariffs for the Eastern region (Octopus since i had those to hand)
kWh Now April Electricity 2000 0.2067 413.40 0.2923 584.60 41.4% 0.2401 87.64 0.3765 137.42 56.8% Total 501.04 722.02 44.1% Gas 20000 0.0401 802.00 0.0734 1468.00 83.0% 0.2611 95.30 0.2722 99.35 4.3% Total 897.30 1567.35 74.7% 1398.34 2289.38 63.7%
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MWT said:MikeRob63 said:QrizB said:Welcome to the forum.MikeRob63 said:My percentage increase from April 1 is 63%.Then your numbers make sense.Gas consumption has had a higher percentage rise than electricity, roughly 83% vs 41% so your high gas use shifts your overall percentage higher..The standing charge differences have a relatively low impact on the total compared to the consumption.Just rough numbers using two capped tariffs for the Eastern region (Octopus since i had those to hand)
kWh Now April Electricity 2000 0.2067 413.40 0.2923 584.60 41.4% 0.2401 87.64 0.3765 137.42 56.8% Total 501.04 722.02 44.1% Gas 20000 0.0401 802.00 0.0734 1468.00 83.0% 0.2611 95.30 0.2722 99.35 4.3% Total 897.30 1567.35 74.7% 1398.34 2289.38 63.7% 0 -
MattMattMattUK said:Pentris said:I contacted Ofgem about my 100% Electricity standing charge increase with Octopus. It seems all that has been talked about by MSE is the approx 55% increase in total costs. Look at Ofgem's reply below.
Gas standing charge goes up by 1p per day but electricity standing charge by 20p per day, thats 80%
The more people that bother OFGEM because of the overly complicated way that they present what should be simple data, the more chance that they might simply publish capped SC & unit rates rather than obfuscate it amongst fictitious "average" usage, when most people are not "average" by the very definition of "average"
I want to go back to The Olden Days, when every single thing that I can think of was better.....
(except air quality and Medical Science)
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