The current energy crisis is causing significant disruption, and affecting the tariffs energy providers can offer. For all the most recent information, read our article on the current energy crisis and what to do about soaring costs.

The energy cap is expected to increase by an eye-watering £1,530 in October meaning those on default energy tariffs paying by direct debit will see an average increase in their annual bills from £1,971 to around £3,500.

The massive increase is due to soaring wholesale gas prices, which have led to many providers going out of business in recent months.

Here, we explain what the energy price cap is, why it was introduced, and whether you can beat it.

What is the energy price cap?

The energy price cap limits how much suppliers can charge consumers for their energy usage. The cap is set by Ofgem which reviews and updates it every six months to reflect factors like wholesale energy prices and distribution costs. Ofgem can also alter the price cap depending on market changes.

The current cap, which runs until the end of September 2022, is £1,971 and is expected to increase to around £3,500 from October. Bear in mind that these figures are designed only to provide an indication of the maximum amount per year the average household using a “typical” amount of energy would pay. If, for example, you live in a large property, or use a lot of energy each year, you will pay more than this.

The energy price cap only applies to default tariffs – or standard variable tariffs – which are often the most expensive plans offered by gas and electricity suppliers. However, the cap also affects customers on prepayment tariffs, which are typically more financially vulnerable. If you’ve never switched energy suppliers before, or have rolled off a fixed energy price, it’s likely you’ll have been automatically rolled onto one of these tariffs. 

Why was the energy price cap introduced?

The energy price cap was introduced to make sure people who never switch energy suppliers pay a fairer price for their gas and electricity. By setting a maximum charge rate, the cap limits the amount that energy suppliers can charge per unit of energy if you are on a default tariff.

How can you beat the energy price cap?

Unfortunately, steep wholesale energy prices combined with the fact that several suppliers have gone bust, mean that it’s now impossible to find a tariff that is lower than the current price cap.

You can find all the most recent information in our article on the current energy crisis and what to do about soaring costs.

You can however, make a number of simple lifestyle changes to help you save money on your energy bills, which could potentially save you up to around £700 a year. For example, turning your thermostat down one degree, draught-proofing your home and switching to energy-saving light bulbs can all make a difference to bills.

If you’re unable to pay your energy bills read our article What can you do if you can’t pay your energy bills? to find out where to go for help.

If you’re unable to pay your energy bills read our article What can you do if you can’t pay your energy bills? to find out where to go for help.

Have you introduced any energy saving measures, and have they helped reduce your bills? You can join the community discussion, or leave a comment below. We’d love to hear your experiences.

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