Precisely what does Ofgem cap?

Idomeneus

Can anyone please inform me precisely what is capped by Ofgem?  I have searched the Internet for the information, and I have even tried to find it on Ofgem’s Web site but failed.  I know the caps apply only to the standard/default variable tariffs of suppliers - that is not the issue.

For example, does Ofgem cap the unit rate and standing charge that a supplier can charge for electricity and gas in each region?  Or does Ofgem cap the percentage increase of the unit rate and standing charge that a supplier can impose for electricity and gas in each region.  Or what?  And whatever the answer is, where can I find it in Ofgem’s documentation?

Whenever I search for the information, all I encounter are bland statements about the effect of the new caps on the average/typical consumer.  I am almost certainly not a typical/average consumer.  And what is the meaning of Octopus Energy’s cryptic statement that they are charging £50 less that the Ofgem cap?  The statement is meaningless to me.

MWT

Everything you need is here:

https://www.ofgem.gov.uk/publications/default-tariff-cap-level-1-april-2022-30-september-2022

The short answer is that the standing charge is capped and the cost for the standing charge and the consumption of a typical user is capped. With different cap levels and assumptions about consumption by region, energy type, payment method and metering type.

Ultrasonic

https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/

MWT

Idomeneus said:

...And what is the meaning of Octopus Energy’s cryptic statement that they are charging £50 less that the Ofgem cap?  The statement is meaningless to me.

They are reducing the electricity standing charge for existing customers on their variable tariff from April 1st.

The tariff is set to be £2 below the cap anyway, they are reducing it to deliver a further £48 reduction over the course of a year.

https://octopus.energy/blog/why-we-are-increasing-energy-prices-for-some-customers/

QrizB

Idomeneus said:

Can anyone please inform me precisely what is capped by Ofgem?

You've got some good answers already. If you need another one, check the link in my signature.

Idomeneus

QrizB said:

You've got some good answers already. If you need another one, check the link in my signature.

Brilliant!  Thank you so much.

I was under the impression that this fictitious benchmark consumer, who uses 3,100 kWh of electricity per annum and 12,000 kWh of gas per annum, was merely being used as an example of a typical consumer.  I now have the valuable insight that the Ofgem cap is actually defined in terms of the benchmark consumer.

Ofgem’s tables, with columns headed “Region, i”, “Nil kWh” and “m (12,000 kWh)” were just too cryptic for me and I couldn’t find an explanation in the Ofgem documentation.

MWT

Idomeneus said:

QrizB said:

You've got some good answers already. If you need another one, check the link in my signature.

Brilliant!  Thank you so much.

I was under the impression that this fictitious benchmark consumer, who uses 3,100 kWh of electricity per annum and 12,000 kWh of gas per annum, was merely being used as an example of a typical consumer.  I now have the valuable insight that the Ofgem cap is actually defined in terms of the benchmark consumer.

Ofgem’s tables, with columns headed “Region, i”, “Nil kWh” and “m (12,000 kWh)” were just too cryptic for me and I couldn’t find an explanation in the Ofgem documentation.

Just to add a layer of confusion, the figures you see quoted in the news and by suppliers are actually based on 2900kWh not 3100kWh for electricity.

Ofgem calculates the cap using 3100kWh but requires suppliers to use 2900 for any quotes they produce.