Energy Price Cap Explained

Archie_Duke

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.

Merlin139

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.

Pentris

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.

 

MattMattMattUK

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 information about how and why is available? What was the actual point of contacting them? 

TheMilkmansDad

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?

MikeRob63

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

QrizB

Welcome to the forum.

MikeRob63 said:

My percentage increase from April 1 is 63%.

How much energy do you use each year (this will be shown on your bill as your Estimated Annual Consumption)? Were you on EDF's Standard Variable Tariff before 1st April, and are you remaining on it after?

MikeRob63

QrizB said:

Welcome to the forum.

MikeRob63 said:

My percentage increase from April 1 is 63%.

How much energy do you use each year (this will be shown on your bill as your Estimated Annual Consumption)? Were you on EDF's Standard Variable Tariff before 1st April, and are you remaining on it after?

Hi, I am currently on EDF's standard variable tariff and will be on it after April the first. My calculations are based on 2000kWh electricity and 20000kWh gas.

MWT

MikeRob63 said:

QrizB said:

Welcome to the forum.

MikeRob63 said:

My percentage increase from April 1 is 63%.

How much energy do you use each year (this will be shown on your bill as your Estimated Annual Consumption)? Were you on EDF's Standard Variable Tariff before 1st April, and are you remaining on it after?

Hi, I am currently on EDF's standard variable tariff and will be on it after April the first. My calculations are based on 2000kWh electricity and 20000kWh gas.

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%

MikeRob63

MWT said:

MikeRob63 said:

QrizB said:

Welcome to the forum.

MikeRob63 said:

My percentage increase from April 1 is 63%.

How much energy do you use each year (this will be shown on your bill as your Estimated Annual Consumption)? Were you on EDF's Standard Variable Tariff before 1st April, and are you remaining on it after?

Hi, I am currently on EDF's standard variable tariff and will be on it after April the first. My calculations are based on 2000kWh electricity and 20000kWh gas.

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%

Hi your tariff is very close to mine and the calculation is almost identical.  I'm just curious as to why EDF seem reluctant to admit to me that depending on usage, customers may well end up with a percentage increase that is higher than the 54% which is freely referred to for the standard variable tariff. With probable increases again in October this will have a compound effect. Like many others I have turned the stat down a degree and adjusted the programmer. 

facade

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 information about how and why is available? What was the actual point of contacting them? 

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"