Power Surge - Energy Price Cap Increase

Changes in the cost of energy and inflation have seen the energy price cap increased by 6.4% for the period 1st April to 30th June, raising the typical household’s* energy bill to £1,849. This is £111 higher than the previous quarter. However, the actual bill a household faces will depend on the energy usage, size of the property, and its energy efficiency.

For those living in poorly insulated homes, the price increase will hit hardest and homes with lower energy performance ratings (EPC bands D to G) can face much higher energy bills than those in better-rated homes. With over 18 million homes in the UK having lower EPC ratings, the price cap increase has once again raised concerns over the affordability of energy bills for many, highlighting the need to improve the energy efficiency of many homes to reduce the cost burden. 

How much extra will you pay? 

Based upon a property’s EPC rating, the property portal Rightmove estimates that the 6.4% increase could add the following to the average energy bill;

• 1-bed flat (EPC A): +£34 pa to +£227 pa (EPC G)
• 3-bed semi-detached house (EPC A): +£31 pa to +£342 pa (EPC G)
• 5-bed detached house (EPC A): +£47 pa to +£763 pa (EPC G)

How does the price cap affect you? 

If you're on a fixed tariff, your rate won’t change. However, if you're on a standard variable tariff, your bill will increase according to the new price cap. This applies to customers who pay by direct debit, prepayment meters, and standard credit.

What about unit rates?

The price increase also affects unit rates, with gas rising from 6.34p to 6.99p per kWh, and electricity going up from 24.86p to 27.03p per kWh

What else should you know?

If you use a prepayment meter, the discount will now be applied to the standing charge instead of the unit rate. The standing charge will also change under the new price cap, as follows;

• Electricity standing charge will decrease slightly to 53.80p per day (down from 60.97p).
• Gas standing charge will rise slightly to 32.67p per day (up from 31.65p).

It is worth noting that the standing charge, which covers the costs of maintaining the energy supply network and supporting government and environmental schemes, is set to come under scrutiny, with Ofgem having launched a review, with the possibility that energy companies may need to offer zero-standing-charge tariffs in the future.

How can you save on energy costs? 

Switching energy suppliers or checking for better deals with your current provider might help reduce your bills. It’s also worth reading your meter regularly to ensure your direct debit payments are accurate.

With energy costs forecast to fluctuate in the coming months, staying informed and exploring energy-saving options can help mitigate these price increases. Homes with high EPC ratings pay lower energy bills, so making energy efficiency improvements could reduce costs over time.

 

*Note: According to Ofgem the "typical" household is a medium-use household in a 2-3 bedroom home