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What is the energy price cap?
Calculated by Ofgem, this initiative was created as protection for consumers. Its purpose is to give the option of defaulting onto suppliers’ basic energy tariffs, with rates on these tariffs protected by the energy price cap.
Approximately 22 million UK households are on their supplier’s standard ‘default’ tariff.
The price cap is calculated quarterly. The next price cap will be announced on 24 November 2022 for the period 1 January 2023 to 31 March 2023.
The Energy Price Guarantee has been put in place to reduce the unit cost of electricity and gas so that households pay, on average, approximately no more than £2,500 a year for their energy.
This should save each household around £1,000 a year.
As an example, for customers with typical usage who pay by direct debit, electricity will be charged at 34 pence per/kWh with a daily standing charge of 46 pence. Gas will be charged at 10 pence per kWh with a daily standing charge of 28 pence.
Of course, these rates are averages and will vary by region, payment and meter type; but it gives you an idea of the charges and how the Energy Price Guarantee should support customers.
What’s the difference between price cap and Energy Price Guarantee?
The Energy Price Guarantee supersedes the price cap, but only while it’s in place. So, regardless of any new price cap level announced, if the Energy Price Guarantee is in place, approximately £2,500 is the maximum amount that will need to be paid in a year.
How you can check your rate and save on your bills
Considering the financially tumultuous times we’re living in, chances are, you’ll not currently find a better deal than being on a supplier’s default rate. But just in case, keeping an eye on market changes and monitoring your energy use is recommended.
TLGEC believe everyone should be able to warm their homes this winter. For anyone who is worried or struggling to pay energy bills, payment plans with energy suppliers should be available, and there may even be the possibility of additional help through grants.
Further help can be found through these useful resources:
While the market will always fluctuate, investing in Solar PV and Battery Storage is one great way to prepare for times of uncertainty. Excess Energy harvested by your solar panels provides a two-pronged solution to alleviate the financial stress of the energy crisis; either in being sold back to the grid, or being stored in a battery storage unit for use in times of greater need, without influencing your bills.
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