After greater than a yr of rising power payments, regulator Ofgem has introduced a discount within the Vitality Value Cap from July to September. It is because wholesale power costs are beginning to fall. However Ofgem says it’s unlikely that costs will return quickly to the degrees we noticed earlier than the power disaster started.
So will a discount to the value cap make a giant distinction to your family payments, and can costs hold happening? We take a better look.
What’s the Vitality Value Cap?
In 2019, the federal government launched the Vitality Value Cap in response to rising wholesale power prices. It units a most value that power suppliers can cost households for every kilowatt hour (kWh) of fuel and electrical energy used.
However since October, the annual power invoice for a typical family utilizing fuel and electrical energy (paying by direct debit) has been restricted to £2,500 by the Vitality Value Assure (EPG). That is an extra momentary measure that was first put in place by the federal government in October 2022 as a result of the Vitality Value Cap was so excessive. The federal government’s Vitality Value Assure will return as much as £3,000 from July.
This implies new Vitality Value Cap would be the decrease of the 2, taking the utmost power invoice for a typical family in England, Scotland and Wales to £2,074 a yr. That’s round 17%, or about £426 cheaper for the common family a yr. See beneath.
|April value cap||July value cap||Saving|
|Vitality Value Cap degree||£3,280||£2,074||£1,206|
|Typical family power invoice beneath the Vitality Value Assure||£2,500||£3,000 (However now households pay £2,074 because the power value cap degree is cheaper)||£426|
* Figures are for typical home consumption paying by direct debit and can differ based mostly on precise family utilization.
Whenever you’re understanding how a lot your payments will likely be in comparison with the final six months or so, it’s value remembering that the federal government’s Vitality Payments Assist Scheme has now come to an finish.
From October 2022 till March this yr, all households got a reduction of £400 off power payments as a part of the scheme. This labored out as a credit score of £66 credit score to your electrical energy payments in October and November, and £67 in December, January, February and March. There aren’t at the moment any plans to use the low cost once more this winter until the federal government reinstates the same scheme.
Does the Vitality Value Cap have an effect on me?
If you happen to’re on a set tariff to your power provide, then you definately received’t be affected by the value cap.
The Vitality Value Cap is utilized in case you’re on a default power, or normal variable, tariff. It units a most value that power suppliers can cost for each kilowatt hour (kWh) of power used.
If in case you have a pre-payment meter, the Vitality Value Cap discount will supply a barely larger saving as the associated fee will likely be decreased to the identical price as direct debit customers.
If you happen to pay by direct debit, your power payments are normally based mostly on an estimate of how a lot you employ. So in case you’re in credit score, it’s value doing a meter studying and getting in contact together with your provider to examine you’re nonetheless paying the correct quantity.
READ MORE: Learn how the Vitality Value Cap is ready
How will the change impression my power payments?
The Vitality Value Cap will likely be set at £2,074 a yr from July to September. However that is simply an estimate for a typical, or ‘medium-use family’. And it’s not a cap in your complete invoice, however as an alternative limits what suppliers can cost you per unit of power used.
Vitality Value Cap: What’s the common price charged per unit of power used?
|Vitality Value Cap (Apr-Jun 2023)||Vitality Value Cap (Jul-Sep 2023)|
|Fuel||10.3p per kWh||7.5p per kWh|
|Electrical energy||33.2p per KWh||30.1p per kWh|
Primarily based on common charges for direct debit customers, which differ by area
Ofgem estimates a typical or ‘medium-use family’ as a two- to three-bedroom home with 2 or 3 individuals dwelling in it.
If you happen to stay in a flat, or a one-bedroom home, your power use is estimated to be low. And in case you stay in a four-bedroom residence, with 4-5 individuals, your power use is estimated to be excessive. See beneath.
|Vitality use||Instance – measurement of residence & variety of residents||Typical annual fuel use||Typical annual electrical energy use|
|Low||Flat or 1-bed home; 1-2 individuals||8,000 kWh||1,800 kWh|
|Medium||2-3 mattress home; 2-3 individuals||12,000 kWh||2,900 kWh|
|Excessive||4+ mattress residence, 4-5 individuals||17,000 kWh||4,300 kWh|
How a lot you’ll pay additionally is dependent upon how energy-efficient your house is, and which home equipment you employ – and the way usually you employ them.
Vitality utilization is calculated in kilowatt (kWh) hours, or items. One kWh is sufficient to energy a 100-watt lightbulb for 10 hours, however compared, it takes 4.5 kWhs to energy a single cycle of a tumble dryer.
Will there be a change to the standing cost on my invoice?
The mounted standing cost you pay simply to have a connection, no matter how a lot power you employ, received’t change. The quantity you’ll pay is dependent upon your provider, what tariff you’re on, and the place you reside. The typical every day standing cost for electrical energy will stay at 53p a day, and 29p a day for fuel. That works out at slightly below £300 a yr on common.
Will power prices proceed to fall?
Consultants have forecasted an extra discount, however this received’t be confirmed till 25 August when Ofgem proclaims the cap for the interval from October to December 2023.
When Ofgem introduced the quarterly replace to the Vitality Value Cap from July, CEO Jonathan Brearley mentioned: “After a troublesome winter for shoppers it’s encouraging to see indicators that the market is stabilising and costs are shifting in the proper path. Folks ought to begin seeing cheaper power payments from the beginning of July, and that may be a welcome step in direction of decrease prices.
“Within the medium time period, we’re unlikely to see costs return to the degrees we noticed earlier than the power disaster, and due to this fact we consider that it’s crucial that authorities, Ofgem, client teams and the broader trade work collectively to assist weak teams. Specifically, we are going to proceed to work with authorities to have a look at all choices.”
What different authorities assist is there for power payments?
You could find out extra about a few of the government-funded schemes in England, Scotland and Wales to assist with power payments right here.
One of many schemes that provides assist throughout the winter months is the Warm Home Discount Scheme. If you happen to get advantages, or in case you or your associate get the Assure Credit score aspect of Pension Credit score, you possibly can get a reduction of £150 off electrical energy invoice this winter, or £150 added to your prepayment meter beneath the scheme. You could possibly get a reduction in your fuel invoice as an alternative in case your provider offers you with each fuel and electrical energy, and also you’re eligible. The scheme reopens in October 2023 and extra particulars will likely be supplied within the coming months on
The Energy Bill Support Scheme gave each family £400 of their electrical energy invoice between October 2022 and March this yr. This was an automated fee. However when you have a prepayment meter, this will likely have been despatched to you as a voucher by textual content message, electronic mail or submit. If you happen to haven’t acquired it, contact your provider and ask them to ship you a brand new one. You should use the voucher till 30 June 2023.
You might also be eligible for advantages, grants and assist provided by the federal government and power suppliers. If you happen to stay in Northern Eire, you will discover extra info here.
READ MORE: What’s the distinction between the Vitality Value Cap and the Vitality Value Assure?