The energy price cap will go up by £693 to £1,971 from April, although the government is expected to pledge support for millions of households struggling to manage rising costs.
The price cap, which was introduced by the energy regulator Ofgem in 2018, limits what a supplier can charge on their standard variable, or default, tariff. The cap is based on the price per kWh of electricity and gas that can be charged. It isn’t, however, a limit on total bills, as these depend on usage, so those who live in large properties or who consume a large amount of energy could well see annual bills much higher than £1,971. You can find out more about the price cap in our guide What is the energy price cap?
Jonathan Brearley, chief executive of Ofgem said: “We know that this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy customers support their customers in any way they can.
“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying energy and gas.”
The latest cap means around 15m UK households will see their energy costs rise by 54%, taking bills to their highest level since the cap was introduced.
Default tariffs are usually suppliers’ most expensive tariffs and in the past many energy customers have been able to save hundreds of pounds by switching to a cheaper fixed rate deal. However, soaring global energy costs have meant that for the past few months, suppliers have been unable to offer deals lower than the price cap. Many suppliers have ceased trading altogether due to rising wholesale costs and the cap limiting the amount they can charge customers. If your supplier has stopped trading, find out what happens next in our guide What happens if my energy supplier stops trading?