Energy regulator Ofgem has today (Thursday 25 May 2023) announced its quarterly update to the energy price cap for the period 1 July - 30 September 2023.
From 1 July, the energy price cap will be set at an annual level of £2,074 for a dual fuel household paying by direct debit based on typical consumption, which reflects recent falls in wholesale energy prices.
The new price cap represents both a reduction in last quarter’s cap, and also a reduction in how much customers will pay on their bills. Since October 2022, consumers have been supported by the Government’s Energy Price Guarantee, which caps the typical bill at £2,500.
| April price cap | July price cap | Reduction | |
|---|---|---|---|
| Price cap level* | £3,280 | £2,074 | £1,206 |
What customers pay* (with Energy Price Guarantee) | £2,500 | £2,074 | £426 |
* Figures are for typical domestic consumption paying by direct debit, and will vary based on actual household usage.
Today’s update means that, for the first time since the global gas crisis took hold more than 18 months ago, prices are falling for customers on default tariffs. The savings can now be passed on to customers more quickly, thanks to Ofgem now updating the price cap quarterly rather than every six months.
At its peak, the price cap reached £4,279 and, whilst today’s level is lower than last quarter, it is still above the levels it was before the energy crisis took hold, meaning many households could still struggle to pay bills.
While the price cap has dropped from its winter peak, it remains well above the pre-2021 average, and many people will still find such high bills difficult to pay. Earlier this year, Ofgem CEO Jonathan Brearley highlighted that many households continue to struggle to afford their energy bill – therefore more focus will be needed for government, the regulator and the industry to support the most vulnerable groups this winter.
Ofgem CEO Jonathan Brearley said:
“After a difficult winter for consumers it is encouraging to see signs that the market is stabilising and prices are moving in the right direction. People should start seeing cheaper energy bills from the start of July, andthat is a welcome step towards lower costs.
“However, we know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country. Where people are struggling, we urge them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds.
“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore webelieve that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups. In particular, we will continue to work with government to look at all options.”
Today, Ofgem is also consulting on the next steps in its drive to make the retail energy sector more resilient to turbulent market conditions, after a number of suppliers failed during the energy crisis as they did not have enough capital to stay in business. Some of the costs of those failures were shared among all energy consumers.
Ofgem has already brought in tougher rules for companies’ finances to reduce their risk of failure, has introduced regulations on how much they can rely on customers’ credit balances and Renewable Obligation contributions as working capital, and has enhanced the ‘fit and proper’ tests for energy company directors.
These changes mean that energy suppliers will need to be able to raise more capital and, to be able to do that while still being able to make a reasonable profit within the price cap, Ofgem is proposing that the element of the price cap that covers profit margin – known as Earnings Before Interest and Tax (EBIT) – will see a small increase.
Under these plans, the EBIT allowance will allow an efficient energy supplier to make a reasonable profit that reflects its business model and ensure it can be investable in the long term, while keeping a lid on excess profits.
For the October price cap, the EBIT allowance is indicatively expected to be £37 for the typical bill. Under the proposed changes, the EBIT allowance in the typical annual bill would be around £10 higher, with the new EBIT allowance being set at around 2.4% of the full price cap level in that period. By contrast, supplier failures during the gas crisis cost each household an average of £83 and Ofgem is determined not to see a repeat of this situation.
Ofgem has issued guidance to energy suppliers which sets out the conditions they need to meet if contemplating paying dividends to shareholders. The overarching principle is that suppliers that need to improve their capital position should use profits to build their capital, rather than paying dividends.
Today’s further publications are designed to protect energy customers, increase the core resilience of the whole energy market and support the delivery of the price cap.
These are:
- Supplier earnings before interest and tax (EBIT) statutory consultation
- Price cap extension final decision
- Call For Input on operational expenditure
- Typical Domestic Consumption Value final decision
The next quarterly price cap update will be in August 2023.
NOTES TO EDITORS
Energy price cap explained
The energy price cap was introduced by the government and has been in place since January 2019, and Ofgem is required to regularly review the level at which it is set. It ensures that an energy supplier can recoup its efficient costs while making sure customers do not pay a higher amount for their energy than they should. The price cap, as set out in law, does this by setting a maximum that suppliers can charge per unit of energy.
Anyone on a fixed tariff should speak to their supplier about moving to a standard variable rate tariff. While there may be an exit for moving off a fixed tariff early, this is likely to be very small compared to potential savings.
Ofgem has robust rules in place to help people in vulnerable situations, and suppliers are obliged to offer payment plans and direct customers to available support.
Bill-payers will continue to receive additional support via the EPG until the end of March 2024, as confirmed by the Chancellor on Thursday 17 November 2022. The level of this support is set by Government.
There is no immediate action for consumers to take as a result of today’s announcement.
The EBIT statutory consultation is part of a package of measures to create a more resilient and investable supply sector. This will ultimately benefit consumers, as it protects them from the cost of supplier failures and enables investment to improve the quality of services. Ofgem is setting out our minded-to position on a revised EBIT allowance for cap period 11a onward.
We anticipate seeing an increase of the allowance to a level equivalent to 2.4% of EBIT in Q4 2023 (in comparison to the 1.9% in the current allowance). We believe the increase in necessary to allow the sector to attract investment and help towards achieving improved financial resilience. Beyond that, we have made changes to the way the allowance scales with overall price cap level, which means consumers are better protected in the event of a price spike in the future.
Updated number of customers on different tariff types as of April* 2023
- New no. of customers on SVTs – ‘around 29 million’
- New no. of SVT (non-PPM) customers – ‘around 25 million’
- New no. of SVT PPM customers – ‘around 4 million’
- Total number of customers on fixed tariffs: 'around 3 million' (with the vast majority being non-PPM)
* Latest Financial Responsibility Principle RFI data is for March 23. Tariff and Customer Account RFI data is as of April 23 (used to calculate the SVT payment method splits).
The Energy Price Guarantee is a Government support measure to protect consumers with the level of support decided upon by Government.
Ofgem administers the scheme and publishes cap rates on a quarterly basis.
The tariff cap was legislated by government in order to protect default tariff customers (i.e. those on standard tariffs) from being overcharged. Price cap updates are currently published on a quarterly basis.
The price cap level is based on typical use for an average household and is a cap on energy unit price not a cap on total bills. For an individual customer, the amount they will pay varies depending on how much energy they use, where they live, and how they pay for their energy.
The methodology for setting the price cap is set out here and is regularly reviewed by Ofgem:
Section 5 sets out future price cap dates: Check if the energy price cap affects you | Ofgem
Published cap levels for the charge restriction period 10b of the default tariff cap: 1 July 2023 – 30 September 2023.
The price cap protects around 29 million customers on default or variable rates. The £2,074 per year level of the cap is based on a household with typical consumption on a dual fuel electricity and gas bill paying by direct debit. The price cap is now updated on a quarterly basis. More information on this can be found on the "Ofgem confirms changes to the price cap methodology and frequency ahead of new rate to be announced later this month" press release.
For customers who pay by standard credit (cash or cheque) pay the default cap has decreased by £1,270 from £3,482 to £2,211 for typical dual fuel consumption. The additional costs reflect the higher cost for energy companies to serve them.
The 29 million customers protected by the price cap includes around 4 million prepayment meter (PPM) customers. The PPM level of the default cap has decreased by £1,248 from £3,325 to £2,077 for average dual fuel consumption. The additional costs for PPM customers reflects the higher cost for energy companies to serve them. For electricity only customers on Economy 7 paying by Direct Debit has decreased by £882 from £2,282 to £1,400 for typical consumption (4,200 kWh).
The values shown in the text above include VAT and are expressed for the current Typical Domestic Consumption Values (TDCV) of 2,900kWh of electricity, 12,000kWh of gas, and 4,200kWh of electricity for Economy 7.
The price cap is a cap on a unit of gas and electricity, with standing charges taken into account. It is not a cap on customers’ overall energy bills, which will still rise or fall in line with their energy consumption. From 1 July the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 30p per kWh for electricity customers and a standing charge of 53p per day. The equivalent per unit level for a typical electricity muti-register customer is 29p per kWh and with a standing charge of 53p per day. The equivalent per unit level for a typical gas customer is 8p per kWh with a standing charge of 29p per day.
Breakdown of costs in the energy price cap
Dual fuel customer paying by direct debit, typical energy use (GB £) £2,074.
The chart above shows indexed wholesale prices from cap period 10b (July – September 23) to cap period 11a (October - December 2023). Wholesale costs make up the majority of a customer’s bill.
Prior to October 2022 update – we observed wholesale prices for future delivery over an indexation period. This was carried out twice a year, from the preceding February to August for the winter period (October - March) and from September to January for the summer period (April - September). The fixed horizontal lines show the average wholesale cost allowance for each six month price cap period based on the price of the relevant forward looking energy contracts (the jagged line).
From October 2022 to March 2023, as set out in our 4 August decision document, the wholesale allowance calculated within the price cap uses a transitional approach to price indexation compared to previous periods as such they are not directly comparable.
From April 2022 we have determined the wholesale cost allowance within the price cap four times a year, based on the price of the forward-looking energy contracts over the previous three months.
The fixed horizontal line represents the weighted average wholesale cost allowance for the three month price cap period based on the price of the relevant forward looking energy contracts and number of observed trading days (the jagged line).
Wholesale gas price costs in the energy price cap
Wholesale electricity price costs in the energy price cap
Data sets behind these graphs are proprietary and can be sourced from ICIS.
FAQs
How can I lower my consumer energy bill? ›
- Your Residential Hub.
- Billing & Payment.
- Rebates.
- Energy Efficiency.
- Energy Dashboard.
- Programs & Services.
- Renewable Energy.
- Electric Vehicles.
Replacing traditional incandescent bulbs with compact fluorescent lightbulbs (CFLs) or light emitting diodes (LEDs) is one of the quickest and easiest ways to save money and conserve energy.
What uses the most electricity in a home? ›- Wet appliances. Washing machines, dishwashers and tumble dryers account for 14% of a typical energy bill, taking the top spot in our list. ...
- Cold appliances. ...
- Consumer electronics. ...
- Lighting. ...
- Cooking.
The minimum bill is essentially a minimum usage charge of $30 per month that spreads the cost of maintaining the electric system across all customers who depend on a reliable grid – meaning all the equipment that's necessary to move energy to and from homes and businesses.
What costs the most on your electric bill? ›What costs the most on your electric bill? Heating and cooling are by far the greatest energy users in the home, making up around 40% of your electric bill. Other big users are washers, dryers, ovens, and stoves. Electronic devices like laptops and TVs are usually pretty cheap to run, but of course, it can all add up.
Can Consumers Energy shut off in winter? ›The Cold Weather Rule does not totally forbid winter disconnection. If a disconnection notice is received the member must act promptly. Members are encouraged to make nominal payments each month to avoid disconnection for non-payment in April when the Cold Weather Rule no long applies.
What is the most efficient way to save electricity? ›- unplugging electronics when you're not using them.
- plugging electronics into a power bar and switching it off.
- setting up a charging station with a smart power strip so you can limit charging time.
Paying your credit card early can save money, free up your available credit for other purchases and provide peace of mind that your bill is paid well before your due date. If you can afford to do it, paying your credit card bills early helps establish good financial habits and may even improve your credit score.
What appliances use electricity even when turned off? ›Home office equipment such as power strips, desktop computers, monitors, printers, lamps, and anything with a digital display can use electricity even when they're turned off.
What uses more electricity washer or dryer? ›Washing Machines & Dryers
Dryers use more electricity of the two appliances, so you may also consider air drying clothes when possible to minimize your electricity consumption on laundry day.
Does a hair dryer use a lot of electricity? ›
On average, hair dryers use about 1,500 to 2,000 watts of electricity. Using a hair dryer for 10 minutes per day will use about 9.13 kilowatt-hours of electricity per month and 109.5 kilowatt-hours of electricity per year. A hair dryer costs an average of $1.30 to use for a month and $15.54 to use for a year.
What is the cheapest time to use Duke Energy? ›DISCOUNT ENERGY HOURS
1 a.m. – 3 a.m. and 11 a.m. – 4 p.m.
Bill adjustment means a reduction of a fee on a provider's bill, or other alteration of a provider's bill.
What is Duke Energy fixed bill? ›Your FixedBill looks at your past energy usage patterns and compares them against historical weather conditions to determine a monthly payment amount. You pay the same amount for 12 months with no settle-up, regardless of what the weather is like.
What raises electric bill the most? ›Here's a breakdown of the biggest energy use categories in the typical home: Air conditioning and heating: 46 percent. Water heating: 14 percent. Appliances: 13 percent.
Does TV use a lot of electricity? ›Yes. TVs can use a lot of electricity and quickly add up to your electricity cost. Old technology TVs like CRT and Plasma eat up more watts; however, the latest LCD and LED TVs are way more efficient and have less power hungry which is a relief. A modern TV uses around 50 to 100 Watts, depending on the screen size.
What's the most expensive appliances to run? ›- Tumble dryer.
- Oven.
- Dishwasher.
- Washing machine.
- Fridges and Fridge freezers.
- Kettle.
- Television.
- Hair dryer.
Wear several layers of light weight, warm clothing rather than one layer of heavy clothing. Wear hats, mittens, and blankets indoors. Close curtains and cover windows and doors with blankets. Everyone should try to stay together in one room, with the door closed, to keep in body heat.
How long will a house stay cold without power? ›How Long Will a House Stay Warm Without Power? A house will begin to lose heat as soon as the power cuts. It should stay warm for 8-12 hours, depending on environmental conditions.
Why is my consumers bill so high in winter? ›It's a frigid fact that you use more energy in cold weather. Most people spend more time at home in the cold weather, thus using more energy. Your heating system works much harder to keep your home comfortable in cold weather. Even if you don't change your thermostat setting, it runs longer to heat your home.
What time is electricity cheapest? ›
Electricity is often cheaper late at night or early in the morning, so if you run your heaviest loads during those times, you'll be able to save on your electric bill.
What is the best time to do laundry? ›Run your washer and dryer early in the morning or at night to avoid the surge. During the winter, electricity demand is highest in the morning hours between 7 and 9 am when people are waking up and turning up their heat. Doing laundry in the evening is your safest bet.
What bills should always be paid first? ›Generally, the bills you should pay first are the ones that cover necessities — the main resources that keep you and your family safe and healthy. These necessities include shelter, water, heat and food. Once necessities are paid for, focus on expenses related to your vehicle.
What is the 15 3 rule? ›The Takeaway. The 15/3 credit card payment rule is a strategy that involves making two payments each month to your credit card company. You make one payment 15 days before your statement is due and another payment three days before the due date.
What is the best day of the month to pay bills? ›Paying credit card bills any day before the payment due date is always the best way to avoid penalties. Paying credit card bills any day before the payment due date is always the best.
Does leaving phone charger plugged in use electricity? ›According to the Energy Saving Trust, any switched on charger that is plugged in will still use electricity, regardless of whether the device is attached or not.
Does unplugging chargers save electricity? ›Unplugging devices when they're done charging will not only save energy, but will also extend their lifespan. Devices like modems, routers, and cable boxes should be left plugged in, as they often take a while to reboot when you turn them back on.
Is it OK to leave phone charger plugged in without phone? ›Most devices we own consume electricity even when not in use. This is also true of energy-efficient, Energy-Star-rated devices such as your laundry machine or even your fridge. In reality, a phone charger uses energy whenever it is plugged in, regardless of whether it charges your phone or not.
How much does it cost to run a dryer for 1 hour? ›'Taking a national average of 15 cents per kilowatt (kWh), you are looking at 30 to 90 cents per hour of running a tumble dryer, depending on energy consumption.
What uses electricity overnight? ›If you leave your computer or laptop plugged in to charge overnight, you could be wasting a significant chunk of electricity. Even when it's off, that power cord will continue to draw energy. Phones. Similarly, leaving your phone plugged in to charge overnight is a bad idea.
What is the cheapest time of day to do laundry? ›
Try washing before 4 p.m. or after 7 p.m. – Many energy companies charge extra for electricity during their “peak hours,” which see increased energy usage. During the summer, run your washer early in the morning – energy use peaks on hot afternoons.
How much does it cost to run a TV? ›| Screen Size | Power Consumption (Watts) | Avg Monthly Cost* |
|---|---|---|
| 24 inches | 50 W | $1.56 |
| 32 inches | 70 W | $2.184 |
| 37 inches | 80 W | $2.5 |
| 42 inches | 120 W | $3.74 |
When the EPA looked at various household appliances, the clothes dryer was the biggest energy hog. That's right. The average clothes dryer uses more electricity than the average refrigerator.
How much electricity does a washing machine use? ›Washing machine wattages cover a huge range, from under 300 watts per hour for the most efficient models to over 1,500 for the real energy hogs. Your washing machine's age is a big factor, because modern washing machines are overall more efficient than older models.
What is the most expensive time of day to use electricity? ›It's cheaper at night, when demand for power is at its lowest. This quieter period is called the off-peak hours, which usually falls between 10pm and 8am. Conversely, peak hours are during the daytime, when more people are using electricity and demand is higher. Not all energy suppliers follow time-of-use tariffs.
Does Duke Energy always require a deposit? ›All residential customers must establish credit prior to the connection of electrical service. Customers with existing Duke Energy services who have no more than two late payments in the last 12 months and service has not been disconnected for non-pay are not required to pay a security deposit.
How long does it take Duke Energy to disconnect for non payment? ›This process takes 30-45 days to complete. Participation in the program does not mean that your power will not be disconnected for nonpayment or interrupted due to an outage.
What does Medicare adjustment mean? ›"Adjustment" (discount) refers to the portion of your bill that your hospital or doctor has agreed not to charge. Insurance companies pay hospital charges at discounted rate. The amount of the discount is specific to each insurance company.
What is the difference between charge payment and adjustment? ›Billed Charges: This is the total amount charged directly to either you or your insurance provider. Adjustment: This is the amount the healthcare provider has agreed not to charge. Insurance Payments: The amount your health insurance provider has already paid. Patient Payments: The amount you are responsible to pay.
What is a customer invoice adjustment? ›An invoice adjustment is new transaction with its own document number that is separate from, but linked to, the original invoice and is used to credit (decrease amount due) the amount owed by a customer. This is how you would process a credit memo.
What is budget billing Duke Energy? ›
Budget Billing. Duke Energy's Budget Billing lets customers pay a predictable amount every month to better manage their budget. The amount is periodically reviewed and adjusted to avoid large settle-ups. Learn more about Budget Billing here. Pick Your Due Date.
What happens if I cancel budget billing? ›You can remove your account from the program at any time by accessing Your Account online or by calling us at 1-800-743-5000. Please keep in mind that if you cancel the Budget Billing program while you have a payoff balance, the amount you owed or credited will be applied to your next month's bill.
How can I lower my electric bill in PA? ›Customer Assistance Programs (CAPs) are designed to help low-income residential customers maintain utility service. CAPs can help lower your monthly utility bill, and may also reduce or remove the amount you already owe. The company works with you to determine what you can pay based on your household income.
How can I lower my electric bill in Texas? ›- Turn off the lights when leaving a room.
- Only run the air conditioner or heater when home.
- Open windows to allow a breeze instead of adjusting the thermostat.
- Change air filters regularly.
The Winter Protection Plan (WPP) protects both senior and low-income customers from disconnection and high energy bill payments during the winter months (Nov. 1 through March 31). You qualify for the plan if you meet one of the following requirements: Are age 65 or older.
What is the grace period for consumers energy? ›Residential customers will be charged when you have unpaid payments due that are six or more days late. Commercial or industrial customers will be charged when you have unpaid payments due that are four or more days late. How Can I Better Understand My Bill?
How much is the average power bill in PA? ›Monthly electric bills are a product of how much electricity you use per month and your electric rate. In Pennsylvania, the average monthly electric bill for residential customers is $210/month, which is calculated by multiplying the average monthly consumption by the average electric rate: 1,168 kWh * 18 ¢/kWh.
Why is electricity so expensive in PA? ›The Pennsylvania Public Utility Commission is saying that prices are going up for gas and electric bills for all state-regulated electric utilities. The reason being is distribution and supply charges which make up anywhere from 40-60 percent of utility bills.
How do you get on the CAP program in PA? ›We'll give you a hand
Don't worry. We'll keep all of your information private. To apply for CAP, contact Dollar Energy Fund at 1-888-282-6816 or apply online through the Dollar Energy Fund MyApp tool.
Simply load the dishwasher after dinner, and wait until after 9 p.m. or the morning to run it. Remember: On weekdays, energy costs less before 4 p.m. and after 9 p.m. Energy always costs less on weekends and most holidays.
Do ceiling fans reduce electric bill? ›
However, if you use ceiling fans, you can help save on energy use and lower monthly costs. This is because they typically cost less to use than an air conditioning unit, and when used in combination with the AC, it can be extremely effective.
Why is Texas electric bill so high? ›In 1970 Texas's population was 11 million and as of 2022 it's about 30 million. This is putting more and more pressure on infrastructure that wasn't originally designed to support such a large population. Since demand is increasing, the state needs more electricity, there's no way around that.
Is it legal to shut off water in Michigan? ›(3) A provider shall not shut off service unless it sends a notice to the customer by first-class mail or personally serves the notice not less than 10 days before the date of the proposed shutoff. A provider shall maintain a record of the date the notice was sent.
How do I get help with shut off notices in PA? ›Help in reducing your bills
Contact your utility company or the Community Action Program serving your area in order to apply or to get more information. If your case involves a threatened or actual shut off of utilities, you should contact the PUC at (800) 692 7380.
DTE Energy is an electric utility headquartered in Detroit, Michigan.
Why did my consumers energy bill double? ›A higher bill reflects the amount of energy your home consumed. Some months, like June through September, you'll typically use more energy. You may also have paid an increased rate if your monthly energy use exceeded 600 kWh for the monthly bill you're concerned about.
Why is consumers energy so expensive? ›The increased demand for electricity makes it more expensive to create or buy. Higher summer prices encourage people to limit their use, helping minimize everyone's costs. Delivery service charges are the costs to provide you with services and local energy distribution.
Is consumers energy only in Michigan? ›Consumers Energy is an investor owned utility that provides natural gas and electricity to 6.7 million of Michigan's 10 million residents. It serves customers in all 68 of the state's Lower Peninsula counties. It is the primary subsidiary of CMS Energy.