THE energy price cap limits how much households on default tariffs pay for their gas and electricity, and it’s expected to go up this year.It rose by a record £139 last year amid surging wholesale gas prices and is set to rise even further in 2022 – here is how the cap works.
1The energy price cap limits how much you pay on default deals
There are 11million Brits on default or standard variable tariffs offered by energy providers.
You may be on one of these contracts if a fixed rate deal finished and you haven’t switched.
They are usually more expensive than fixed tariffs and the rate can often be hiked by the supplier.
The government launched an energy price cap in January 2019, which is set by industry regulatory Ofgem, to limit how much providers can charge on default energy bills so Brits aren’t ripped off.
You can also save money by shopping around but here is how the energy price cap affects your bills.
What is the energy price cap?
The energy price cap limits how much suppliers can charge for default tariffs.
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This includes the standing charge and price for each kilowatt hour (kWh) of electricity and gas.
It is set by Ofgem each summer and winter based on the underlying price of wholesale energy and the costs that companies face in supplying gas and electricity.
There is also a separate cap for households using prepayment meters.
This means if wholesale prices have gone down then your bills could fall, but they can also rise if the underlying figures have increased.
The amount you pay will also depend on your energy usage, where you live and how you pay such as through prepayment or direct debit.
Your bill will change automatically if you are on a default tariff and your provider decides to alter prices in line with the cap.
The cap doesn’t apply if you are on a fixed rate tariff but you will fall onto a provider’s default deal once your contract ends and if you don’t switch.
How much is the energy price cap?
Ofgem sets the price cap twice a year for a six-month period each.
Suppliers have only been able to charge up to £1,138 on their default tariffs between April and September 2021 based on a cap that was announced in February.
The energy regulator announced in August that the price cap would rise by £139 from October 1 to £1,277 – the highest since the cap launched in January 2019.
A further 4million households with pre-payment met …
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