Changes to the Energy Price Cap
Recently Ofgem announced that it will be lowering the energy Price Cap from £2,074 to £1,923. From 1 October, electricity and gas customer's So Flex variable tariff rates will be changing in line with the unit prices set by Ofgem’s price cap. The Typical Domestic Consumption Values (TDCVs) are also changing, and therefore tariff rates will be quoted and compared with lower usage values. In this short blog we’ll explain the price cap and what this means for your fixed rate tariff.
The Price Cap
The energy regulator, Ofgem, sets out its energy prices for customers on a standard variable tariff every quarter, with 1 October being the next one. Remember, the cap is not on how much your annual bills will be; the more energy you use, the more you'll pay.
As a reminder, below are some of the events that caused energy prices to rise well above what we would normally expect. Remember, Russia historically has supplied 40% of Europe’s gas needs and even though the UK does not directly import much Russian gas, the price of gas across Europe is all linked. And, as a majority of the energy generated in the UK is produced by gas, when the gas price goes up the power price follows and vice versa.
While wholesale energy prices have fallen over the last 9 months, they still remain volatile. Opting for a fixed price tariff means thinking long term and avoiding fluctuations in the energy market. You can check out our fixed price tariffs here.
Typical Domestic Consumption Values
Often known as TDCVs, these define the typical household’s gas and electricity usage. These are usually reviewed every two years, but were stopped due to the disruption caused by the global pandemic. From October the new TDCV will decrease from 2,900 kWh per year for electricity to 2,700 kWh, and from 12,000 kWh per year for gas to 11,500 kWh.
Fixed Price Tariff
Analysts at Cornwall Insight predict that the average price paid over the next year will be roughly 2% lower than the current price cap rates. It is worth considering that the price cap is currently forecast to increase when it is next changed in January, according to Cornwall Insights.
Our fixed price tariff is designed to protect you from increasing energy prices, which is more important than ever during uncertain times. This means that our fixed price tariff will potentially save you money in the long run and can potentially save you money compared to being on our standard variable tariff. If you’re on our fixed price tariff, you’ll already be protected against increases.
It's important to us that you have a clear understanding of what this news means for you as a customer. That's why we're committed to explaining complex issues in simple terms and providing you with support to make informed decisions. If you need a reminder of the difference between being on a standard variable tariff and a fixed price tariff, visit our guide here.
As always, we're here to support you and help you through any challenges you may face. If you have any questions or concerns about the upcoming energy price change or need help switching to a fixed rate tariff, please don't hesitate to contact us.
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