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Energy price cap: What is it and how does it affect my bills? | Energy price cap: What is it and how does it affect my bills? |
(32 minutes later) | |
Energy bills are set to go up for 15 million households in England, Wales and Scotland. | Energy bills are set to go up for 15 million households in England, Wales and Scotland. |
It's because the energy price cap - the maximum price suppliers can charge customers on a standard tariff - is rising. | It's because the energy price cap - the maximum price suppliers can charge customers on a standard tariff - is rising. |
Will my bill increase when the cap is raised? | Will my bill increase when the cap is raised? |
If you are on a standard tariff or prepayment meter, then the answer is yes. | If you are on a standard tariff or prepayment meter, then the answer is yes. |
The energy price cap will rise from the start of October. | The energy price cap will rise from the start of October. |
Those on standard tariffs could see an increase of £139, from £1,138 to £1,277, regulator Ofgem has announced. | Those on standard tariffs could see an increase of £139, from £1,138 to £1,277, regulator Ofgem has announced. |
Prepayment customers could see an increase of £153, from £1,156 to £1,309. | Prepayment customers could see an increase of £153, from £1,156 to £1,309. |
Your supplier can increase your bills up to the maximum allowed by the cap. | Your supplier can increase your bills up to the maximum allowed by the cap. |
If you are on a fixed tariff you will not be affected - but keep an eye on when your deal ends. | If you are on a fixed tariff you will not be affected - but keep an eye on when your deal ends. |
Can I find a cheaper deal? | Can I find a cheaper deal? |
The good news is that you have two months to do something about it. | The good news is that you have two months to do something about it. |
You can investigate cheaper deals, either with your own supplier or by moving to a rival. | You can investigate cheaper deals, either with your own supplier or by moving to a rival. |
Switching to a lower-priced fixed deal can save you hundreds of pounds. | Switching to a lower-priced fixed deal can save you hundreds of pounds. |
All suppliers have these, so the simplest way to save is to contact your existing supplier and ask to be moved to its lowest-priced fixed deal. | All suppliers have these, so the simplest way to save is to contact your existing supplier and ask to be moved to its lowest-priced fixed deal. |
However, you could probably save more by switching to a rival. | However, you could probably save more by switching to a rival. |
Jonathan Brearley, chief executive of Ofgem, said people "can reduce their energy bills further by shopping around for a better deal". | Jonathan Brearley, chief executive of Ofgem, said people "can reduce their energy bills further by shopping around for a better deal". |
Is it easy to switch my supplier? | Is it easy to switch my supplier? |
It's simple to switch using an energy comparison site - all you'll need is your postcode, the name of your current supplier, and the name of your current tariff. | It's simple to switch using an energy comparison site - all you'll need is your postcode, the name of your current supplier, and the name of your current tariff. |
Citizens Advice has a useful guide to choosing the right tariff | Citizens Advice has a useful guide to choosing the right tariff |
Ofgem also sets out the steps you should take to switch energy supplier and shop for a better deal. | Ofgem also sets out the steps you should take to switch energy supplier and shop for a better deal. |
What is the energy price cap? | What is the energy price cap? |
The energy cap is the maximum price suppliers can charge customers on a standard - or default - tariff. | The energy cap is the maximum price suppliers can charge customers on a standard - or default - tariff. |
This is the deal you'll get if you don't sign up to a fixed rate tariff when you join a supplier. | This is the deal you'll get if you don't sign up to a fixed rate tariff when you join a supplier. |
You'll also end up on a standard tariff if your fixed rate ends and you don't switch to a new deal. | You'll also end up on a standard tariff if your fixed rate ends and you don't switch to a new deal. |
Standard tariffs are variable, which means energy companies can increase - or decrease - the rate they charge you at any time. | Standard tariffs are variable, which means energy companies can increase - or decrease - the rate they charge you at any time. |
However, the energy price cap limits the amount your supplier can charge you. | However, the energy price cap limits the amount your supplier can charge you. |
Why was the energy price cap introduced? | Why was the energy price cap introduced? |
It was introduced by Ofgem in 2019 to help consumers struggling with the increasing costs of heating and powering their homes. | It was introduced by Ofgem in 2019 to help consumers struggling with the increasing costs of heating and powering their homes. |
Before its introduction, energy users who stayed with the same supplier on a standard variable tariff were at the mercy of suppliers who could set prices as high as they wanted. They were often accused of not passing on lower prices. | Before its introduction, energy users who stayed with the same supplier on a standard variable tariff were at the mercy of suppliers who could set prices as high as they wanted. They were often accused of not passing on lower prices. |
It left many millions of customers paying up to £300 more a year than people who had switched to a cheaper supplier or fixed tariff. | It left many millions of customers paying up to £300 more a year than people who had switched to a cheaper supplier or fixed tariff. |
Inaccurate gas and electricity bills criticised | Inaccurate gas and electricity bills criticised |
People working from home 'face £45 monthly energy bill rise | People working from home 'face £45 monthly energy bill rise |
Green boilers: What are they and how much do they cost? | Green boilers: What are they and how much do they cost? |
How is the cap worked out? | How is the cap worked out? |
The price cap is based on the number of gas and electricity units a typical customer uses. | The price cap is based on the number of gas and electricity units a typical customer uses. |
The unit measure, from which your energy bill is calculated and which you may see on your bills, is a kilowatt-hour (kWh). | |
The headline price cap figure is based on a typical user - which is 3,100 kWh of electricity and 12,000 kWh of gas in a year, according to Ofgem. | |
Your annual energy bill could be higher or lower than the typical charge depending on the size of your property and how much energy you use. | Your annual energy bill could be higher or lower than the typical charge depending on the size of your property and how much energy you use. |
Every February and August, Ofgem announces the new level of the price cap based on the latest estimated costs of supplying energy. | Every February and August, Ofgem announces the new level of the price cap based on the latest estimated costs of supplying energy. |
It takes into account the wholesale price of gas and electricity - which is what suppliers have to pay for the energy. This accounts for about 40% of your bill. | It takes into account the wholesale price of gas and electricity - which is what suppliers have to pay for the energy. This accounts for about 40% of your bill. |
When wholesale energy prices fell last summer following the first lockdown, Ofgem reduced the level of the cap by £84 for last winter. | When wholesale energy prices fell last summer following the first lockdown, Ofgem reduced the level of the cap by £84 for last winter. |
But in February it increased the cap by £96, blaming rising wholesale costs. | But in February it increased the cap by £96, blaming rising wholesale costs. |
Since then the wholesale cost of energy has climbed by more than 50%, which accounts for the latest increase. | Since then the wholesale cost of energy has climbed by more than 50%, which accounts for the latest increase. |
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