The energy price cap: what you need to know | Tenant news

The Energy Price Cap was first introduced in January 2019 by Ofgem (the Office of Gas and Electricity Markets) which is the independent regulator of gas and electricity in the UK.

It was introduced as a way of regulating how much people on variable energy tariffs pay, to stop energy companies from charging whatever they liked. Domestic households are protected by this, but businesses aren’t.

You may see in the news at the minute, that there will be a 5% increase in the energy price cap, meaning that it will be £1,928 a year. It’s important to note that this figure is based on a ‘typical user’ – the actual price change will depend on a number of factors including:

• How much energy you actually use
• How big and/or energy efficient your home is
• Where in the country you are
• How you pay for your energy.

If you want to find out more about how the ‘typical user’ price is calculated, take a look at Ofgem’s Average gas and electricity usage web page.

What you are charged for

Energy is paid for in pence per kWh (kilowatt hours). Every electrical item in your home will contribute to how much energy you use, and every electrical item will use a different amount of energy.

There are loads of variables to be aware of – how efficient your appliance is, how often you use it etc, but as a rough guide:

• A kettle uses around 0.11 kWh per use based on heating 1 litre of water
• An electric oven uses roughly 1.56 kWh per use
• A fridge-freezer uses approximately 408kWh a year.

Have a look on Carbon Footprint’s website to see a more comprehensive list of home appliances and their energy consumption.

In addition to paying for this, you also pay a daily standing charge.

What are standing charges?

A standing charge is a fixed daily amount you have to pay, regardless of how much you use. The price of this depends on your supplier and where you live. Even if you have a pre-payment metre you will pay a standing charge.

The standing charge is set-up to cover various costs. These include:

• Maintaining the energy network of pipes and wires that brings gas and electricity across the UK to your home
• Carrying out meter readings
• Funding greener energy development
• Government initiatives to support vulnerable households.

Standing charges for homes with a smart meter may be lower than with a traditional or prepayment meter because there is less admin involved in taking readings.

More information

If you want to find out how the price cap rise will affect you, you can speak to your energy supplier, and find out your energy usage over the last year to estimate the price increase.

If you need help with reducing your energy bills, we have more information in our Cost of Living Hub. Don’t forget you can always speak with Habinteg Direct on 0300 365 3100, or speak to your Neighbourhood Coordinator for help and advice with rising bills.