Ofgem has now announced its new price cap level. Here's what you should know.
What is the price cap?
The price cap was introduced by the government back in 2019 as backstop protection for customers on an energy tariff with standard variable rates. Electricity and gas prices are updated every April and October by energy regulator Ofgem to reflect changes in industry costs.
On Thursday 3rd February 2022, Ofgem announced that the price cap level would be increased by £693 for the average customer in England, Wales and Scotland.
For prepayment customers, the price cap level will rise by £708 for the average household.
The government is currently laying out measures to spread out the price shock. These could include:
- £200 off electricity bills for all customers applied in October 2022 to be repaid in £40 installments over the next five years.
- Extension of the eligibility criteria for the Warm Home Discount.
- £150 council tax rebate for homes in bands A-D.
Many of our customers have already asked if they can opt out of this scheme. At this point we are unable to confirm what options are available. The government and Ofgem are working to establish the details of how it will work and how it will be applied. Once we have further information we will update our website with more details.
We'll update this page as we learn more about the government's proposals.
Why are energy prices rising?
Like all energy suppliers, we buy energy from the wholesale energy market to then distribute to you, our customers. Even renewable energy needs to be bought in this way.
The cost of energy in the market has increased significantly in recent times to an unprecedented high. Since this cost makes up a large proportion of your bill, we need to increase the prices on our price plans too.
Am I affected by the price cap?
If you're on our standard variable tariff, we'll be writing to you in the coming weeks to explain how these changes affect you. If you're on our Fix & Reward Tariffs, your prices will stay the same until your tariff term ends. We'll contact you when your fixed tariff term is about to end with guidance for what to do.
You can check which tariff you are on by logging in to your account.
Should I switch to another tariff?
This really does depend on what's right for you and your home. Any changes to our prices will be reflected in your dashboard in the coming weeks.
Remember that the price cap level will not increase until 1st April. This is when relevant changes to your tariff will be observed and you will start to pay any new prices as a result.
So, you still have time to think about next steps.
If you are one of our standard variable tariff customers, you will be receiving an email or letter keeping you updated with how this price cap will be affecting you with advice on what to do.
If you do decide to switch to our Fix & Reward tariffs, you'll be paying the same price for a set period of time and we have no exit fees so you still have flexibility.
Please bear in mind that we may need you to have a smart meter fitted, pay by Direct Debit and manage your account online, so please do read the small print before signing up.
We recommend checking your tariff online in the coming weeks.
It's also good to know that other factors may impact how much your energy bills cost including:
- How you pay.
- The type of energy meter you use.
- Your energy usage.
There are also lots of ways you can reduce your energy usage and therefore how much you will pay. Check out these helpful tips for increasing your energy efficiency.
What support is available?
This is a worrying time for everyone as the cost of energy continues to go up. We understand that you may be struggling to pay. Here's where you can find support.
Warm Home Discount.
The Warm Home Discount is there to help those who are struggling to keep up with their energy payments. Customers on the scheme will get a one-off, annual discount of £140 (inclusive of VAT) on their electricity bill. It's a scheme supported by the government and energy suppliers. There is a deadline to apply so please check the link below.
The Green Home Grant.
The Green Homes Grant is a £2 billion scheme, launched by the government, to help homeowners pay for energy saving improvements for their homes by installing measures such as wall insulation, solar panels and air source heat pumps.
This is to improve the warmth of homes, cut energy bills and help the UK to be zero-carbon by 2050.
Homes for Living.
Homes for Living is a scheme designed to support your mobility, wellbeing and independence, offering free and attractive home aids and equipment designed to give you more freedom in your home.
Debt advice resources.
If you are also worried about how money can have an impact on your mental health. We advise you to talk to our charity partner Mind.
Talk to our Energy Specialists if you are having difficulty.
Our Energy Specialists are here to help if you are concerned about the impact of the price cap rise on your energy bills. If you are struggling to pay, please visit our help page to find out more about how we can support you.