On the 8th of September 2022 the UK Government announced an intervention into the energy market to limit the impact of rapidly increasing energy prices.
What is the price guarantee?
This price guarantee will replace the Ofgem Price Cap, which was set to £1971 for the average customer and was put in place to prevent it from increasing to around £3,549 on October 1st.
Instead, the new price guarantee came into play on 1st October and will limit what the average customer will pay to around £2,500.
This price guarantee works similarly to the price cap in that if you use more energy you’ll pay more, but if you use less, you’ll pay less as it’s a representative amount based on average energy consumption.
The average consumption estimate is for a household using around 2900kWh of electricity and 12000kWh of gas.
The price guarantee was originally set to be in place for 2 years, however in the Autumn Statement on 17th November 2011 it was changed to increase by 20% bringing the average household bill to £3000 a year.
What will my tariff be?
This guarantee will cap the tariff unit rates and standing charges. This tariff will vary slightly based upon region and payment method.
Standing Charge: 46.36p per day
Unit Rate: 34p per kWh
Standing Charge: 28.49p per day
Unit Rate: 10.30p per kWh
This tariff was set to be in place for the next 2 years, however this was changed in October and would instead last until April 2023.
We feel it’s important to note that this is going to be at least twice as expensive at the energy price cap in October 2021.
What about the previous support package?
The previous support package, discussed here, will still be available this year. A similar package may need to be available for the next 2 years to support those most at risk.
What further support is available?
A package of support has been announced for businesses and for those off the gas grid who are not covered by a price cap for fuel such as wood, oil or LPG.
Some of this support will be in place next year, with the exception of the energy bill support scheme payment of £400 which will be removed.
I’m on a fixed price deal, what do I do?
A discount will be applied to fixed price deals more expensive than the Energy Price Guarantee bringing it line with the capped tariffs.
If you are on a fixed deal cheaper than the Price Guarantee you will not see a price increase until your deal comes to an end.
I’m still worried about my bills
In reality this cap is still going to mean people are paying at least twice as much for their energy this winter as last with further rises in 2023.
Our energy price crisis blog still has lots of useful information.
If you’re worried about your bills or paying for your energy you can get in touch for a free and impartial advice call or home visit with one of our energy advisors by booking on the link here.