Ofgem energy price cap: Everything to know as bills expected to fall
Ofgem is set to announce the latest energy price cap tomorrow, with trusted forecasters predicting a welcome fall.
Energy consultancy firm Cornwall Insight forecasts that bills could be going down by £293 on average.
The change will come into effect in April, lasting three months until the end of June – when Cornwall Insight predicts a further fall.
Here’s everything you need to know about what the announcement means for you and your bills:
What is Ofgem’s energy price cap?
The energy price cap is the maximum amount energy suppliers can charge for each unit of energy for households on a standard variable tariff.
It is not the maximum amount you could be charged for energy in a year, nor a fixed rate. Rather, it is an indication of the average amount households can expected to pay if their energy consumption is ‘typical’.
In practice, the price cap corresponds to the maximum limit on what providers can charge per unit, either per kWh or as a daily standing charge. What you will actually pay will depend on where you live, how you pay your bill, and the type of meter you have.
The price cap was introduced by the government in 2019 to ensure energy bills accurately reflect the cost of energy. It is updated every three months.
Why is the energy price cap going down?
The energy price cap is calculated based on wholesale energy prices. This is the amount energy providers pay for gas and electricity before supplying it to households – and it has begun to fall steadily in recent months.
Energy consultancy firm Cornwall Insight has gained a reputation in recent years for near-accurate predictions of coming energy price cap changes. They consider a range of factors, including wholesale energy prices and Ofgem’s own approach, to make their forecasts.
While the lowering of the energy price cap will come as welcome news to those struggling with their bills, it is still nearly £500 higher than when the cap was introduced in January 2019.
Is there any way I can save more on energy bills?
While the energy price cap remains firm – with providers rarely charging below it in recent years – there is some possible wiggle room.
Martin Lewis has revealed that the E.ON Next Pledge variable tariff will offer three per cent below the price cap to all customers. This means that, whether the price cap rises or falls, you are guaranteed a discount.
Some energy providers also offer grants for those who are struggling to pay their energy bills. These include Scottish Power, EDF, E.ON and Octopus. It is worth contacting your energy provider to find out if you are eligible. British Gas also offer a grant of up to £2,000 to customers of any energy provider.
