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Households will see their gas and electricity bills change on Saturday when Ofgem’s latest energy price cap comes into force.
Here’e everything you need to know.
Released quarterly, the cap limits what utility companies can charge customers for each unit of gas and electricity they use.
It sets these two things:
- The maximum amount energy firms can charge for each unit (measured in kilowatt-hours) of gas and electricity;
- The maximum daily standing charge – which is the part of your bill that pays to be connected to the grid.
This still means the more energy you use, the more you pay.
It only applies to people in England, Scotland and Wales on standard variable – or default – tariffs.
Currently, this is most households – whether you pay by direct debit or a prepayment meter.
It doesn’t apply to the small numbers of people on fixed rate tariffs – set by the energy companies, not the regulator – and people who use oil to heat their homes.
Ofgem announced it is cutting its price cap from £3,280 to £2,074 in May- but Saturday is when it comes into force.
It means the average household energy bill will fall by £426 a year.
The £2,074 figure is how much the average household would typically use over a period of a year based on the updated unit price.
But the total annual cost per customer will be different depending on how many people you live with, the size of your home and how much energy you use.
Unit prices for gas and electricity are going down by around 3p.
According to money-saving campaigner Martin Lewis, this will mean bills decreasing by roughly 17%.
So for every £100 you were paying for energy, you will now only pay £83, he says.
What about the government help scheme?
Households have been partly shielded from the most recent rise in prices by the government’s energy price guarantee (EPG), which limited annual energy costs to £2,500 for the average household – subsidising Ofgem’s price cap.
It meant the current price cap of £3,280 for March to June was redundant because the government’s EPG was lower.
That support – of £400 over six monthly instalments – comes to an end tomorrow, which allows the price cap to come back into play.
People have been urged to submit meter readings before midnight on Friday to ensure they are paying the lower prices as soon as they come into effect.
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