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Energy price cap: What is it and how does it affect my bills? Gas prices: Why are they so high and what is the energy price cap?
(about 2 months later)
Energy bills are set to go up for 15 million households in England, Wales and Scotland. Householders face a rise in energy bills, as well as the possibility their supplier could go bust.
It's because the energy price cap - the maximum price suppliers can charge customers on a standard tariff - is rising. This is due to a massive rise in the price energy suppliers pay for gas.
Will my bill increase when the cap is raised? Why are gas prices so high?
If you are on a standard tariff or prepayment meter, then the answer is yes. There's been a worldwide squeeze on gas and energy supplies.
The energy price cap will rise from the start of October. A cold winter in Europe last year put pressure on supplies and, as a result, stored gas levels are much lower than normal
Those on standard tariffs could see an increase of £139, from £1,138 to £1,277, regulator Ofgem has announced. There's been increased demand from Asia (which also suffered a cold winter) for liquefied natural gas.
Prepayment customers could see an increase of £153, from £1,156 to £1,309. This has helped push up gas prices in the UK, Europe and Asia. Since January, they've risen 250%. Prices have soared 70% from August alone.
Your supplier can increase your bills up to the maximum allowed by the cap. In the UK, most big domestic suppliers buy gas months in advance - so they have yet to pass on the price rises of the past few months.
If you are on a fixed tariff you will not be affected - but keep an eye on when your deal ends. Many customers are also on fixed tariffs so, until the tariffs run out, bills won't go up.
Can I find a cheaper deal? What is the energy price cap and how is it going up?
The good news is that you have two months to do something about it. The energy price cap is a backstop introduced in January 2019 and set by the regulator Ofgem under government policy.
You can investigate cheaper deals, either with your own supplier or by moving to a rival. It sets the maximum price suppliers in England, Wales and Scotland can charge customers on a standard - or default - tariff.
Switching to a lower-priced fixed deal can save you hundreds of pounds. A higher cap is due to come into force from 1 October, with about 15 million households facing a 12% rise in energy bills.
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. Those on standard tariffs, with typical household levels of energy use, could see an increase of £139 - from £1,138 to £1,277 a year
However, you could probably save more by switching to a rival. Households with larger than average energy use will pay more than £1,277 a year
Jonathan Brearley, chief executive of Ofgem, said people "can reduce their energy bills further by shopping around for a better deal". People with pre-payment meters could see an increase of £153 - from £1,156 to £1,309
Is it easy to switch my supplier? Households on fixed tariffs will be unaffected, but those coming to the end of a contract probably won't be able to find a cheap deal to replace it
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. Because energy firms are now scarcely making a profit on gas, it's likely the energy "cap" will rise again in April.
Citizens Advice has a useful guide to choosing the right tariff In Northern Ireland, there is a separate energy market with two suppliers.
Ofgem also sets out the steps you should take to switch energy supplier and shop for a better deal. Prices will also rise next month by 21.8% (SSE) and 35% (Firmus).
What is the energy price cap? What can I do if my energy supplier goes bust?
The energy cap is the maximum price suppliers can charge customers on a standard - or default - tariff. Is the UK headed for a gas shortage this winter?
This is the deal you'll get if you don't sign up to a fixed rate tariff when you join a supplier. Why is the UK affected particularly badly?
You'll also end up on a standard tariff if your fixed rate ends and you don't switch to a new deal. Gas prices are rising all across Europe, but there are extra reasons why the UK is hard hit:
Standard tariffs are variable, which means energy companies can increase - or decrease - the rate they charge you at any time. The UK is one of Europe's biggest users of natural gas - 85% of homes use gas central heating, and it also generates a third of the country's electricity
However, the energy price cap limits the amount your supplier can charge you. Supplies of renewable energy are down because it's been the least windy summer since 1961 - over the last week, wind provided just 9% of power for England, Wales and Scotland
Why was the energy price cap introduced? A recent fire at a National Grid site in Kent closed a power cable supplying electricity from France.
It was introduced by Ofgem in 2019 to help consumers struggling with the increasing costs of heating and powering their homes. Which energy suppliers have gone bust so far?
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. Since wholesale gas prices started to spike, a number of firms have collapsed due to financial pressure.
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. They have been unable to pay higher wholesale prices or get customers on fixed tariffs to share the burden by increasing bills.
Inaccurate gas and electricity bills criticised Hub, Money Plus, Utility Point, People's Energy, PFP, Green and Avro have been forced out of business.
People working from home 'face £45 monthly energy bill rise Two energy firms fail amid warning more to come
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How is the cap worked out? Food firms face huge price rise for carbon dioxide
The price cap is based on the number of gas and electricity units a typical customer uses. Nearly 1.5 million customers have been affected.
The unit measure, from which your energy bill is calculated and which you may see on your bills, is a kilowatt-hour (kWh). At the beginning of 2021 there were 70 UK energy suppliers. Now, there are just over 30.
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. Industry sources have said there may be as few as 10 left by the end of the year.
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. Gas prices: 'I'm just watching the meter go up'
Every February and August, Ofgem announces the new level of the price cap based on the latest estimated costs of supplying energy. How have you been affected by issues raised in this article? You can share your experience by emailing
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. Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways:
When wholesale energy prices fell last summer following the first lockdown, Ofgem reduced the level of the cap by £84 for last winter. WhatsApp: +44 7756 165803
But in February it increased the cap by £96, blaming rising wholesale costs. Tweet: @BBC_HaveYourSay
Since then the wholesale cost of energy has climbed by more than 50%, which accounts for the latest increase. Upload pictures or video
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