What is the energy price cap? Does it affect me?

Another blow to UK households is a higher energy price cap, which will result in millions of families across the country paying more for their energy.

Those using standard tariffs and using the typical amount of energy per household will increase their bill by £ 139 to a whopping £ 1,277 per year.

Not only that, those who are into prepayment counters are also faced with a £ 153 increase.

It does so at a time of rising inflation, cuts in universal credit and the phasing out of the job-retention program.

The cap hike has made headlines as nine utilities slumped into winter and more are expected to follow.

What is the energy price cap?

The energy price cap is the maximum fee that a provider can charge households for their standard tariffs, including the basic fee and the price per kWh of electricity and gas.

Ofgem, the Gas and Electricity Markets Office, sets the upper limit for summer and winter based on the cost of energy supply to ensure that prices are fair to consumers.

By 2014, the “Big Six” power companies controlled 90 percent of the market, when Ofgem allowed smaller providers to compete and potentially lower prices for consumers.

However, lower prices did not follow, and many challengers went broke as wholesale gas prices rose.

Will the energy price cap affect me?

UK households with fixed tariffs will not be affected by the new cap, but those with a contract that is about to expire will automatically be switched to a standard tariff at the new level.

So far, customers have been able to look for cheaper offers, but this is currently not a viable option as the high price of gas means that all providers have raised their tariffs.

Adam Scorer of National Energy Action, an energy poverty charity, said, “The massive, devastating rise in energy prices will drive over 500,000 more households into energy poverty, so they can no longer heat or power their homes.”

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