What is the energy price cap and could I end up paying more?
Millions of households face an 80% energy bill hike from 1 October after the regulator Ofgem increased the cap on prices to £3,549 a year.
And there is even worse news coming down the track, with the next announcement on what will almost certainly be an even higher cap – covering the first three months of 2023 – due on 24 November. That is, unless the government or the new prime minister steps in before then.
The new £3,549 a year cap is based on a household with “typical consumption” on a dual electricity and gas bill paying by direct debit. It equates to a direct debit of almost £300 a month.
Crucially, it won’t cap someone’s total bill, which will still rise or fall in line with their energy use. This is something that has perhaps been overlooked in a lot of the coverage.
Ofgem is warning that while the new cap level will take effect from 1 October, “it is possible some suppliers may begin increasing direct debits before this date to spread costs”.
Yes. Ofgem says the price cap is “not a cap on the maximum bill a household can be charged, which is based on their usage”.
For anyone with above-average energy use – for example, large families or older people in draughty homes – their annual bill could be even higher – maybe a lot higher – than the headlines suggest.
Myron Jobson, a senior personal finance analyst at the investment platform interactive investor, said: “It is easy to focus on the headline energy price cap figure, but it is important to remember that no two households’ energy usage is the same.”
It was introduced in 2019 and was designed to stop energy companies from making excessive profits. It sets the maximum amount energy suppliers can charge customers on so-called “default tariffs” – the most basic packages
Read more on theguardian.com
