Understanding Price Cap
What is the Energy Price Cap?
- The energy regulator, Ofgem, has set a ceiling on the maximum rate that energy companies can charge customers who are on a Default, Safeguard, Temporary or prepay tariffs.
- An average household on a default credit tariff with both gas and electricity paying by Direct Debit would pay £1,179 a year. An average household on a default prepay tariff with both gas and electricity would pay £1,217 a year. These figures are based on industry average consumption figures.
- This means what you pay depends on your energy consumption, so you could pay more, or less, than the level of the cap based on how much energy you actually use.
- For prepayment customers we expect the cap to be around until 2020 or 2023 for credit customers.
How does the price cap work?
- Ofgem review the level of the cap twice a year with any changes to take effect on 1 April and 1 October each year.
- Ofgem sets the price cap by taking into consideration all the costs that make up energy prices. This includes the cost of buying wholesale energy, charges to maintain the pipes and wires that deliver energy to homes, operating and metering costs.
- The price cap means that price rises are justified, and you are not being overcharged for your energy.
What is the difference between the different tariffs effected by the cap?
- Standard Tariff was our basic (default) tariff which has a variable rate and no exit fees or end date. British Gas closed its Standard Tariff to all new customers on 31 March 2018.
- Temporary Tariffs are our new default tariffs which customers move onto if they don’t do anything when their current fixed term tariff comes to an end. These tariffs have variable rates and no exit fees but do have an end date.
- We recommend customers who are on Standard or a Temporary Tariff should take a look at our fixed tariffs instead.
- Our Safeguard tariff is for those customers who go onto a default tariff who also qualify for The Warm Home discount. This has a variable rate and no exit fees or end date. Your rates are the same if you pay by Direct Debit or cash/cheque.
What are my options?
- Standard and Temporary Tariff customers should consider fixed tariffs that are suitable for you. You can find out more here.
- We will let you know about our other cheaper tariffs and how you can easily switch to a different one if you’d like to.
- Prepayment customers could look at our fixed tariffs and can find more information about switching to a credit meter here.
- You can find out more information on how to save on your bills by saving money here.