Energy Price Cap Update

The government recently announced their plan to replace the Ofgem price cap by the government’s own Energy Price Guarantee from 1 October 2022, but what does this mean?

The new price guarantee starts 1 October, and for someone on typical use will be £2,500 a year and it will last for two years.

The new energy price guarantee isn’t a cap on the total bill, it’s a cap on the unit price. So, the cap sets out the highest amount suppliers are allowed to charge households for every unit of energy they use.

Under the new price guarantee, a typical household can now expect to pay about £2,500 a year. This is based on a household which uses 12,000 kWh of gas a year, and 2,900 kWh of electricity a year. Additionally, the £400 payment to all homes (paid as £66 a month over winter) will continue.

You can find out more information on the government’s Energy Price Guarantee here: Martin Lewis' round-up of the new £2,500 energy price cap – here's what's happening (moneysavingexpert.com)