Money Wellness
Image of an energy meter with pounds stacked up around it
category iconbills
category iconcost of living
calendar icon26 Jun 2023

Act now to avoid paying too much for your energy

Energy bills are set to fall this summer.

Ofgem has announced that a typical gas and electricity bill will be capped at £2,074 a year from 1 July. This is down from £2,500.

You have until midnight on 30 June to submit meter readings. This will make sure you benefit from the reduced prices as soon as they kick in.

If you don’t submit meter readings, suppliers will estimate how much you used before the price change. This could see you overpaying.

What is the energy price cap?

The price cap limits the amount your energy supplier can charge for a unit of gas or electricity.

The figure of £2,074 relates to the bill of an average dual-fuel household. It isn’t a cap on how much you can be charged overall. If you use more than the typical household, you’ll pay more.

What did Ofgem’s announcement say?

Ofgem said the price cap is being reduced to £2,074. Previously, the government’s energy price guarantee meant the bill for an average household was capped at £2,500. Before the latest reduction in the price cap, it was effectively redundant as it was above £2,500 at £3,280.

The energy price guarantee has now come to an end.

Ofgem’s announcement means the unit rate for gas and electricity if you’re on a standard variable tariff will be lower.

Standing charges will remain the same.

These vary from area to area. It might be more expensive in your area if:

  • your home is a long way from a generator
  • the local network is particularly costly to maintain

Does the price cap affect me?

If you’re on a variable tariff, you should see the amount you pay for gas and electricity fall. But any savings will effectively be wiped out over winter, as we won’t be getting the £66-£67 monthly payment from the government.

Many fixed-rate contracts ended when the energy price guarantee was in place. If this happened to you, you’re probably on a variable rate now as there were no fixed-rate tariffs available to transfer to. 

The change to the price cap won’t affect you if you’re currently on a fixed tariff.

Is there any support available?

If you’re receiving means-tested benefits, you’ll receive a £900 cost-of-living payment partly to help with the cost of energy. This payment will be split into three instalments of £301, £300, and £299. You’ll get the payment if you’re claiming one of the following benefits:

  • income-based jobseeker’s allowance (JSA)
  • income-related employment and support allowance (ESA)
  • income support
  • pension credit
  • universal credit
  • child tax credit
  • working tax credit

You won’t get the payment if you’re only receiving new style ESA, contributory ESA, or new style JSA.

If you’re a pensioner, you’ll get an extra £300 cost-of-living payment. Those with disabilities will receive a further £150.

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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