On 8th September 2022 Prime Minister Liz Truss announced an Energy Price Guarantee but what exactly is it, how will it work and what does it mean for you? To help answer these questions and more, we’ve pulled together the key information into these FAQs.
What is the Energy Price Guarantee?
The Energy Price Guarantee is a Government initiative that limits the amount you can be charged per unit of electricity and/or gas.
Energy bills for the average household will be frozen at £2,500 by the new Energy Price Guarantee. The scheme doesn't cap all bills at £2,500, this is an illustrative number based on the average UK household*.
Under the Energy Price Guarantee:
The average unit price for dual fuel customers paying by Direct Debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October 2022
The average unit price for dual fuel customers paying on receipt of their bill (cash/cheque) will be limited to 36.8p/kWh for electricity and 11.1p/kWh for gas, inclusive of VAT, from 1 October 2022
The actual unit rate will vary by region and you will have been notified of what the Energy Price Guarantee means for your by email or letter. You can sign in to your online account using our mobile app, available on Google Play and Apple App Store, or via our website for more information about your tariff.
This discount is applied to your unit rates and does not limit your bill value. This means the more you use the more your bill will be. Of course, the same applies in reverse, so if you use less than the average household, your bills will be less than £2,500. A typical household will save at least £1,000 a year (based on current prices) from October 2022.
* According to Ofgem, the average UK household has 2.4 people who use 2,900 kWh of electricity and 12,000 kWh of gas. This works out at 242 kWh of electricity and 1,000 kWh of gas per month.
When does the Energy Price Guarantee start and end?
The guarantee starts from 1 October 2022 and runs for the next 2 years. At this point, we can’t say whether the guarantee period is likely to be extended or not.
Will my standing charge be reduced?
No. The Energy Price Guarantee limits the amount you can be charged per unit of gas or electricity but your average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October, at 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by Direct Debit.
What will the average bill be now?
Under the new Energy Price Guarantee, a typical UK household will pay an average of £2,500 a year for energy bills. In effect, the Energy Price Guarantee will replace the October energy price cap of £3,549 that was confirmed by Ofgem at the end of August.
This table compares an average energy bill with the new Energy Price Guarantee based on property size.
|Property type||Average annual energy bill under Ofgem Oct price cap||Average annual energy bill under Energy Price Guarantee||Average annual energy bill saving|
|End terrace house||£3,500||£2,450||£1,050|
|Purpose built flat||£2,400||£1,750||£650|
Do I need to apply for the Guarantee?
You do not need to apply, and there’s no need to contact us. We will automatically calculate your bills from 1 October to take the Energy Price Guarantee into consideration.
Please be careful. If you receive an email or text asking you to register your details or - worse still - to send your bank details, this is NOT from Outfox the Market. Please contact a member of our team at 0800 103 2702 to confirm before revealing any information.
How is the Guarantee given to me?
For customers in England, Scotland and Wales who have a monthly, quarterly or other regular bills, the Energy Price Guarantee will simply be applied when we calculate your bill. The Government is currently working out a solution for people living in Northern Ireland.
Am I eligible if I am on a Standard Variable Tariff?
If you’re on a standard variable tariff, Ofgem has shared that an average unit price for dual fuel customers paying by Direct Debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.
These unit prices have been passed to us and all suppliers to ensure that they are used to calculate bills on time for 1 October. The unit rates are averages across the UK – the actual unit rate will vary from region to region, you should have been notified what your new unit rates are effective 1st October.
We will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of this scheme.
Am I eligible if I am on a Fixed Tariff?
Yes. For those customers on fixed rate tariffs, a ‘floor’ unit price for gas averaging at 10.3p/kWh and for electricity averaging at 34p/kWh for direct debit customers will also come into effect on 1 October 2022. A floor unit price was introduced because some people will have fixed at much lower prices some time ago, meaning their annual payments will already be below the £2,500 average set by the Energy Price Guarantee.
Unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas will apply to fixed tariff customers to bring their rates down to, but not below, the floor unit price.
Customers on fixed rate tariffs that are already below the floor unit prices will continue to enjoy those low rates, but will not receive a further discount for the duration of their fixed term. We will be in touch before the fixed term ends and, if you do nothing, you will automatically be moved to our Standard Variable Tariff, which is subject to the Energy Price Guarantee.
For the small number of consumers who fixed at a high rate exceeding the October Ofgem price cap of £3,549, they will receive the full discount of 17p for electricity and 4.2p for gas. However, given the higher starting point, their fixed rate tariff will still have a unit rate that is above the EPG rates. This will ensure that a fair price is paid by everyone.
Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme. While any transfer to a different tariff is a matter for suppliers, at OTM we will switch you to our Standard Variable Tariff without any exit fees, so it may be worth checking your unit rates to see if you are better off being on our Standard Variable Tariff. If you wish to switch to our Standard Variable tariff, drop us an email and we will take it from there.
What other financial help is available for me?
The Energy Price Guarantee is only part of the help the Government is offering to assist with the rising cost of living. The new guarantee is in addition to the £400 Energy Bills Support Scheme and you may even be eligible for other grants and benefits if you:
are state pension age
have a disability
have a low income
have missed payments
Find out more about other schemes you may be entitled to here.
What can I do if I am struggling to pay my bills?
We appreciate this is a really difficult time for many people. Help is available and the first step is simply to call us on our FREEPHONE on 0800 103 2702 about getting more support.
Priority Services Register
Please call and find out more information about our Priority Services Register (PSR).
The PSR is a free service in which you'll be offered additional support from us, our engineers, and the network. You could be eligible for the PSR for many reasons, including having children under five years old or someone over the age of 65 living at the property.
Have a smart meter installed free of charge.
It helps you stay in control of your energy usage. The smart meter and the In-Home Display will enable you to track your energy almost in real-time and you will be able to check where you can save to lower your bills and carbon footprint.
Brand new meter free of charge.
Automated meter reads
Stay in control, view your costs/usage and save to lower the bills
Tips and Tricks to save energy:
Simple Energy Advice calculator
In addition to the Energy Bill Support Scheme further help is available:
£650 Cost Of Living Payment for people on benefits
£300 Cost Of Living Payment for pensioners
Citizen Advice is the official source of free and independent energy advice and support. Visit Citizen’s Advice or call them on 0808 223 113.
Advice Direct Scotland
If you live in Scotland, you can get in touch with Advice Direct. Call 0808 196 8860 or visit their website.
Advice link Cymru
In Wales, for debt and money advice, you can also contact Advice link Cymru Call 0800 702 2020.
As the independent regulator, Ofgem works to protect energy consumers, especially vulnerable people, by ensuring they are treated fairly and benefit from a cleaner, greener environment.
You can visit the Ofgem website for further detail on any help you may be eligible for.
More Independent Advice
The Money Advice Service offers high-quality advice to help you manage debt and avoid unmanageable debt: The National Debt Line is a charity that gives free and independent advice over the phone and online.
Remember the cheapest energy is the energy that you don’t use. So for tips on how to save energy, please visit our blog at www.outfoxthemarket.co.uk/blog