We know that some people may be concerned or/and confused about the recent increases in the cost of energy. We wanted to provided some clarity so here is some information we thought you might find useful!
This article covers:
- What is the energy price cap?
- How much is the new price cap?
- What can you do about the price rises?
- Why has the price cap risen so much?
What is the Energy Price Cap?
The energy price cap is the maximum price that energy providers in England, Scotland and Wales can charge for their standard variable tariff (SVT). The standard variable tariff is the tariff customers are automatically put on if they do not set up a deal with their energy provider or when their fixed tariff comes to an end.
How much is the New Energy Price Cap?
The government’s energy regulator OFGEM has announced that the price cap will rise by 54%, which will take effect on the 1st April 2022.
This price cap covers a 6 months period and a new one will take affect in October 2022.
What Can You do About the Price Rises?
Be a Switchd Member
We will all be paying more for our energy. However, Switchd members can rest assured that they will be on the best deals available. Standard variable tariffs are the cheapest in the market at the moment. We check your details against every deal, every day - so as soon as a better deal becomes available, we’ll switch you and send you an email with all the details.
From October, you will receive a "discount" of £200 on your energy bill - however, you will then have to pay that back in £40 increments over the next 5 years. The initial money to do this is being lent to the energy companies by the Treasury.
Council Tax Rebate
If you are in Council Tax Bands A-D, you will receive a ‘rebate’ in April of £150 automatically.
£144 million of discretionary funding for Local Authorities to support households
Your local authority will be given a share of £144 million to help households in difficulty, including those not eligible for the Council Tax rebate. - Read more about this here: Government support for energy bills and the cost of living - factsheets
The Warm Home Discount
The Warm Homes Discount Scheme will be extended, though at present it is unclear how this will become available (it is not mentioned in official documents and many providers have ceased applications for this winter) - read more about the Warm Homes Discount here.
Why has the Energy Price Cap Risen so Much?
We’ve seen a record increase in the wholesale price of energy over the last 12 months, with costs quadrupling. Since fixed tariffs are not affected by the price cap, the fixed tariffs that suppliers are now offering are very high, as a reflection of the wholesale cost of energy.
See below, the breakdown of costs in the energy price cap.
For further detail on the price cap and more visit OFGEM's website OFGEM | Price cap increase