New Price Cap will be announced this week – what you need to know

Aug 23, 2022 | Articles, Bills, Electricity & Gas, News

More on energy bills:

What’s new?

  • Ofgem will officially announce the new energy price cap this Friday, August 26
  • If your tariff is controlled by the price cap, you’ll pay the new prices from October 1st
  • Industry expert Cornwall Insight predicts the average household will pay £3,554 a year for energy from October
  • The price cap will change again in January, with experts predicting an increase of up to £4650 a year for the same household

 

What is the energy price cap?

The energy price cap is the maximum energy companies in the UK can charge for gas and electricity on their standard tariffs. It is regularly updated in line with the current energy market. The price cap is next set to change in October, and we’ve collected the latest price cap predictions from industry experts to look at what it may be changing to.

 Read our full guide to the energy price cap here

 

Why is the price cap changing?

The Energy Price Cap value is set by Ofgem – the UK regulator for gas and electricity – based on the wholesale cost of energy, as well as other factors that affect the supply of gas and electricity into the UK and its distribution. The price cap was initially intended to be reviewed every six months. However, because energy markets are currently so volatile from October onwards the cap will be reviewed every three months.

 

What will the new price cap be?

Ofgem has not officially announced what the new price cap will be from October, but many industry experts have made predictions.

Under the current price cap, the average family pays £1,971 a year for their energy. In May of this year, Ofgem predicted the October price cap would see this rise by 42% to £2,800.

It’s since become clear that the actual increase will be much more than this. Analysts at Cornwall Insight currently predict that the increase will be closer to 78%, which will see the average household paying £3,500 a year for electricity and gas.

 

When will we know the new price cap?

The new price cap will be confirmed on August 26th. If you want to be updated as soon as this is confirmed then join our mailing list to stay up-to-date on the latest utility news.

 

When will energy prices fall?

We don’t know when energy prices will fall again, but analysts predict that if we see a rise in the January price cap, it is likely to be much lower, and prices may even hold steady. Looking ahead to the April price cap update, this is when some predictions suggest energy prices will begin to fall or at least stay steady. It’s important to note though that these will be price drops compared to the higher October and January caps rather than today.

 Currently, there aren’t any energy tariffs available cheaper than the price cap, or than what the price cap is predicted to increase to. Some providers offer special tariffs to their existing customers, so if you are contacted about this it may be worth considering if the new tariff is less than a 70% increase on the price cap. Energy companies do not have to make their tariffs public, and the rates offered will change from property to property daily.

 

What should I do if I’m struggling with my bills? 

Rising household costs are affecting everyone right now, but if you’re struggling to pay your bills then there is help available. You can see our full guide to the cost of living support offered by the UK government here, but everyone should look out for energy support payments being made to every UK household starting from October. These £66.66 monthly payments will last six months, until March 2023, and do not need to be paid back.

You can also save money on your bills by reducing your energy usage wherever possible. Check out our guides on improving the energy efficiency of your home, even if you have a low EPC, here or visit our blog for more guides on using less energy and saving on your household costs.

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