The Energy Price Guarantee (EPG), introduced in October 2022, applies to domestic electricity and gas consumers. The Chancellor announced further changes in the Autumn Statement 2022 and Spring Budget 2023. The guarantee is in place until March 2024.
This is a freeview 'At a glance' guide to the Energy Price Guarantee (EPG).
Who does this affect?
- It applies to all domestic gas and/or electricity customers.
- The guarantee will not apply to those who use alternative fuels, such as those domestic users not connected to the grid (see below).
How will this affect me?
- There will be a cap on the price of energy charged by your supplier.
- Energy tariffs will be adjusted by the energy suppliers and no action is required to benefit from the new announcement.
- This is in addition to recent price increases so you will probably see an increase in your bills but not as much as you may have been expecting.
Autumn Statement 2022
In the Autumn Statement, delivered on 17 November 2022, the Chancellor announced the following changes:
- The current cap will be raised from April 2023, with the average household energy bill increasing from £2,500 to £3,000 per annum. This cap will last until March 2024.
- The level of support for households using alternative fuels has doubled from £100 to £200. For Northern Ireland, this will be paid to all households.
- A new approach will be developed for consumer protection in the energy market in an effort to stop the current situation from happening again.
Spring Budget 2023
The Chancellor announced at the Spring Budget on 15 March 2023:
- The rise in the EPG would not take place until July 2023 and the EPG would remain at £2,500 from April 2023 until June 2023 at which time it increased to £3,000.
- The premium applied to energy provided via a Pre-Payment Meter (PPM) would be scrapped and those customers would now pay the same rates as those on direct debit.
- From June to September 2023, the PPM discount was delivered by way of a reduction in unit prices.
- From 1 October 2023, the discount will be delivered through a reduction in the standing charges.
From 1 July 2023, the Ofgem price cap was set at £2,074 and will fall again to £1,923 for October to December 2023 (see below for the revised cap). This means that prices are currently below the EPG of £3,000, so no discounts will be received by those paying by direct debit.
Autumn Statement 2023
Additional support for those on PPMs has been announced by the Government, which will apply from 1 January 2024.
- The Ofgem price cap was set at £1,834 for the period October to December 2023.
- The Ofgem price cap for the period January to March 2024 is set at £1,928, a slight increase from the prior quarter.
A new PPM EPG discount will apply from 1 January until 31 March 2024:
- 4.5083p for electricity.
- 6.7565p for gas.
- The specific Pre-Payment Meter (PPM) standing charges for both gas and electricity will vary by region. See the full list for January to March 2024.
What do I need to do?
- There is nothing to claim or apply for unless you are off-grid and do not use gas and/or electricity. It is an automatic change.
- Your supplier will make all the necessary changes, you do not need to do anything.
- If you have any queries, contact your energy supplier.
The government has warned that a request for bank details in relation to this scheme is likely to be a scam.
How does it work in practice?
From 1 October 2022 to June 2023, for those on a standard variable tariff (and paying for dual fuel by direct debit), the average unit price was limited to:
- 34.0p per kWh for electricity.
- 10.3p per kWh for gas.
Average standing charges remained capped until 30 June 2023 at:
- 46p per day for electricity.
- 28p per day for gas.
This measure replaced the Price Cap and ensured that the average annual energy bill would be £2,500 per annum until July 2023.
From July 2023 to March 2024, the Energy Price Guarantee will keep the average household's energy bill at £3,000 (an increase of £500 per annum on the current position). This is under the current Price Cap as set by Ofgem of £3,280, which is also expected to fall further before July 2023.
The support is being funded by the government and will not be passed on to energy suppliers or their customers.
The newly announced support package runs alongside the previous and existing measures already set out:
- £400 UK per household paid in six instalments from October 2022 under the Energy Bills Support Scheme.
- £1,200 of extra support for the most vulnerable.
How long will the support last?
As originally announced, the EPG was to last for two years. In his Fiscal Statement on 17 October 2022, the Chancellor announced that the scheme would run to April 2023 at which time there would be a review led by the Treasury. In the Autumn Statement, the Chancellor raised the maximum that the average household will pay from April 2023. This was then extended until 30 June 2023 in the Spring Budget. This new price guarantee will be in place until March 2024.
How will the support work if I'm not on a standard variable rate or dual fuel?
- Pre-payment meters will have the new rates applied to them. Money credited will last longer.
- The premium charged for energy delivered via a pre-payment meter is to be scrapped and energy companies will charge the same for all customers.
- Variable or fixed rate tariffs and pre-payment meter rates will be reduced to bring most, but not all rates, down to the new guaranteed price (EPG). The discount applied will be up to:
- 17p/kWh (electricity) and 4.2p/kWh (gas) from October to December 2022.
- 31.8p/kWh (electricity) and 6.4p/kWh (gas) from January to March 2023.
- Customers not connected to the grid and those who pay for energy as part of their rent had the initial savings passed on to them from their energy supplier or landlord.
- Households connected to the electricity network but who are not connected to gas will receive the EPG for electricity. An additional £200 has also been provided to compensate for the rise in alternate fuel costs (originally this was £100). This should have been paid automatically through electricity bills. In reality, this did not happen in all cases and an online claim had to be made. This payment was paid directly to all households in Northern Ireland, in recognition of the prevalence of alternative fuel usage in the country.
The scheme works broadly in the same way for Northern Ireland as for Great Britain. The main differences are:
- The scheme was introduced on 1 November 2022, with support backdated to October 2022.
- The backdated support means an increased discount of:
- 19.9p/kWh (electricity) and 4.8p/kWh (gas) from October to December 2022.
- 13.6p/kWh (electricity) and 3.9p/kWh (gas) from January 2023.
- A typical household bill was around £1,950 from 1 November 2022 to 31 March 2023.
- Energy prices will not be capped but the discounts will apply regardless of the tariff level. There will be a minimum price that must be paid of 1p/kWh.
- The EPG no longer applies from 1 July 2023, again, due to the fall in energy prices, although the scheme remains in place until March 2024.
Businesses and non-domestic properties
A new six-month Energy Bill Relief scheme offered support to businesses and non-domestic energy users, such as charities and schools. This is replaced by the Energy Bills Discount Scheme from 1 April 2023 until 31 March 2024.
Action is also being taken at the same time to reduce the cost of energy in the long term.
- There will be an Energy Supply Taskforce set up to renegotiate long-term energy contract costs.
- HM Treasury and the Bank of England will provide short-term liquidity support to firms operating in the wholesale gas and electricity markets.
- Increase domestic energy supply, with the aim of making the UK an energy exporter by 2040.
- The government has announced that it will develop a new approach to consumer protection in the energy markets.
What is the Price Cap?
Ofgem announced that the Energy Price Cap would increase to £3,549 per year for dual fuel for an average household from 1 October 2022. It then increased to £4,279 from 1 January to 31 March 2023 but reduced in April and July 2023 and will sit at £1,923 from 1 October 2023.
The price cap level is based on a transparent methodology and calculations by Ofgem. The data is published on the Default tariff cap level: 1 October 2022 to 31 December 2022 publication.
The price cap protects around 24 million households on default or variable rates on credit meters. The £3,549 per year level of the cap is based on a household with typical consumption on a dual electricity and gas bill paying by direct debit and, will be updated on a quarterly basis.
Price caps in the last two years