The new UK Prime Minister, Liz Truss, has released her plan to limit the energy price cap to £2,500 a year for the average home for the next two years. Factoring in the £400 energy payment beginning in October, bills will rise around 6.5% this autumn instead of the previously announced 70%.
We will update our utility bills calculator to reflect the new unit rates once average figures have been confirmed.
What is the Energy Price Cap?
The energy price cap does what it says on the tin – it’s a cap or limit on the amount that energy suppliers in the UK can charge for domestic electricity and gas. Although it’s often quoted as a monthly or annual cost, the cap is actually on the per-unit cost of energy. Your own bill is still based on usage, average household usage for different-sized homes is used to estimate what individual bills will be.
The cap applies to all Standard Variable Tariffs in the UK. It doesn’t apply to you if you are on a fixed rate tariff. Standard variable tariffs used to be the most expensive way to get your energy, but the energy crisis and price cap now mean that these are the best value tariffs available.
What’s the current energy price cap in August 2022?
The current energy price cap has been in place since April 1st of this year and expires on September 30th. It estimates that a typical household of 2-3 members will pay about £1,971 a year for their electricity and gas based on the unit rates below.
The Current Price Cap
|Unit rate||7.37p per kWh||28.34p per kWh|
|Standing charge||27.22p per day||45.34p per day|
These rates are averages and will vary slightly between regions and suppliers. Some suppliers may use a higher standing charge and lower unit rate or vice versa to reach the same average bill amount.
How is my energy bill calculated?
Your bill is calculated based on your tariff and how much energy you use. Electricity and gas use is recorded by the meters in your home, and for each kWh used you will be charged your unit cost. The standing charge is a fixed daily charge that you pay regardless of whether you use any energy that day. You can check the specific rates of your tariff through your account with your energy supplier, either online or over the phone. You can make sure your energy bills are as accurate as possible by regularly submitting meter readings to your supplier, or by fitting a smart meter. These devices submit meter readings to your supplier automatically, meaning they will never estimate your usage. They also show how much energy you are using in real-time allowing you to spot idle devices that are still costing you money.
When will the energy price cap change?
The energy price cap is next set to change on October 1st. What the price cap will change to is still being decided, and will be formally announced on August 26th. Industry experts all expect that the price cap will increase again, but predictions of how much range from 45-65% – or potentially even higher.
Could I pay less for my electricity and gas?
Currently, there are no tariffs available for customers to switch to that are cheaper than the energy price cap. The few new tariffs that are available are higher than both the current price cap and the level the cap is expected to rise to in October. One supplier recently quoted a 110% increase on capped unit rates for their fixed rate tariffs. With no better value tariff currently available, the best way to save on your bills is to reduce your energy consumption.
Looking for ways to save on energy?
If you’re looking for tips on how to stay cool in the summer without using any extra energy, you can find our guide here. If you’re struggling with energy bills then there is a range of government support available, including a £ 400-pound payment that will be given to every UK household this year as a credit on their energy bills. We’ve outlined a complete timeline of the support available and when it will be paid which you can find here.