What is the Energy Price Cap?
In May, energy regulator Ofgem announced the Energy Price Cap would decrease as of 1st July 2023. This is excellent news, but how much can you expect to save, and will it make a difference to your household bills? In this article, we explain what the Energy Price Cap is and how it could save you money on your home energy bills.
What is the Energy Price Cap?
The Energy Price Cap set by Ofgem is the maximum price energy suppliers can charge you for each kilowatt hour (kWh) of energy you use in your home. As it's a cap, how much you pay depends on how much energy you use.
How Does the Energy Price Cap Work?
Despite the name, the Energy Price Cap won't cap the total amount you spend on your energy bill. The Energy Price Cap limits the amount energy suppliers can charge for each unit of electricity or gas used in your household. It also limits how much energy suppliers can demand in standing charges.
The Energy Price Cap provides valuable consumer protection, but it's only part of a bigger plan to reduce your energy bills. You can save money on your energy bills by taking steps to reduce your energy consumption and switching to a cheaper supplier.
Who Sets the Energy Price Cap?
Ofgem, the UK energy regulator, sets the Energy Price Cap, updating it every three months in line with changes in wholesale energy prices.
How Much Can You Save with the Energy Price Cap?
As of Saturday, 1st July 2023, the Energy Price Cap for a typical dual-fuel household paying direct debit will reduce to £2,074 per year. How much you save depends on your current energy usage, but pundits expect an average decrease of around 17%. Subsequently, if you pay £200 a month for your energy, you could see your energy bill discounted to £166 a month.
Who Can Take Advantage of the Energy Price Cap?
Due to soaring energy prices, the Energy Price Cap has been a lifeline for many consumers. However, the cap only applies to default tariffs. If you are on a fixed-price tariff, your energy bills may be higher than the Energy Price Cap.
More Reduce Your Energy Bills
While the Energy Price Cap should help to reduce your energy bills, there's more you can do to lower them even further, including the following:
Switch Energy Suppliers
Even with the Energy Price cap, you may find a cheaper deal by switching energy suppliers. We can find out how much you could save on your household energy bills with just a few details. It only takes a few minutes, so why not find out today?
Reduce Your Energy Consumption
There are many ways to reduce household energy consumption, from turning off lights when you leave a room to better insulating your home. The following tips could help you save money on your energy bills:
Take advantage of green energy subsidies - Although the upfront cost of installing solar panels and other green energy solutions might seem expensive, government subsidies can help with your initial outlay, and you should save money in the long run.
Install energy-efficient appliances - If you plan on replacing any of your household appliances, ensure they're energy-efficient. Because energy-efficient appliances use less energy, you'll notice longer-term savings on your energy bills.
Get a smart meter - A smart meter makes tracking your energy usage easier, helping you identify areas where you can reduce your energy consumption and save money.
Take advantage of government schemes - The energy crisis has affected countless homes, so the UK government had to offer support. While they have run schemes designed to help everyone, they also provide schemes designed to help low-income households with their energy bills.
As an added bonus to saving money on your household energy bills, following these tips will also help reduce your environmental impact.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.