The energy price cap is set to rise to £1,717 a year from October 1 for a typical dual fuel household paying by direct debit. This increase represents a jump of around 10%. The cap will be in place from October 1 to December 31. This period coincides with the onset of colder weather when many households will start using their central heating.
If you are on a standard variable rate (SVR) tariff and pay by direct debit, you will be protected by the Ofgem price cap, except if you have a fixed-rate deal. Despite its name, the price cap doesn’t restrict your total energy bill but limits what you pay for each unit of gas and electricity consumed. It also sets a maximum on standing charges, the fixed daily fees for staying connected to the energy grid.
For those paying by direct debit, the gas unit rate will increase from 5.48p to 6.24p per kilowatt-hour, and the standing charge will rise from 31.41p to 31.66p per day. The electricity unit rate will go up from 22.36p to 24.50p per kilowatt-hour, with the standing charge increasing from 60.12p to 60.99p per day.
The price cap figure is an estimate of what an average household using 2,700 kWh of electricity and 11,500 kWh of gas annually can expect to pay. Different rates may apply depending on your payment method. For instance, those paying via pre-payment meters will have a slightly lower cap at £1,669 per year, while those paying upon receipt of the bill will face a cap of £1,829 annually.
Your method of payment for energy will also affect your total bill. Ofgem revises the price cap every three months considering various factors such as wholesale energy costs, network maintenance expenses, and supplier profits. The most recent price cap assessment period ran from May 17, 2024, to August 16, 2024.
In conclusion, while the energy price cap offers some protection for consumers, it’s important to be aware of how your consumption and payment method influence your bills as prices continue to fluctuate.