What's the latest price cap and what does it mean for me?
- The latest cap was announced on 5th February with Ofgem setting the price at £1,1381 for the average bill
- An increase in wholesale costs means this is £96 higher than the previous cap, however there are still 80 cheaper tariffs in the market
- Our cheapest tariff is £9492, so relying on the price cap means you’ll pay at least £189 more for your energy on average
The current price cap is £1,138,
if you switch today you can save at least
more than the price cap
Tariffs switchable via MoneySuperMarket as at 5th February 2021
The energy regulator Ofgem sets the energy price cap in a bid to limit the price a supplier can charge you per unit of electricity and gas. The unit measure, which your energy bill is calculated from and which you may see on your bills, is a kilowatt-hour (kWH).
However, the energy cap only applies to customers who are on a prepayment meter or a standard variable tariff (SVT), which is a provider’s most expensive tariff. If you’ve never switched, or your last switch was over a year ago, you’ll have usually defaulted to a standard tariff when your fixed period ends.
Furthermore the price cap does not limit your total energy bill which will vary depending on how much energy you use.
On 5th February 2021, Ofgem’s latest price cap was announced. An increase in wholesale energy costs as global demand recovered in the second half of 2021 in addition to higher distribution costs means the new cap has increased by £96. The new cap is set at £1,138 per year.
The price cap for prepayment tariffs is also increasing by £87, to £1,156 per year.
“Ofgem’s announcement that the price cap will be increasing, will put an average of £96 pounds on the bills of around 11 million households. So, those customers who are sitting on an expensive standard variable rate tariff will certainly see a hike in their bills from April.
“Consumers that rely on the price cap to protect them from price hikes or give them a ‘good deal’ on their energy bills do so in error. Our research estimates that consumers that have relied on the cap to keep their bills down will have paid £613 more than those who have switched once a year since the cap’s introduction in January 2019.
“Our message to billpayers is clear: if you’ve been with your supplier for a while, it’s likely you’re overpaying so shop around for a better deal.””
How the cap has changed over time
The cheapest in market tariff switchable via MoneySuperMarket on the effective date of each price cap
The price cap was introduced in November 2018 and is usually reviewed every 6 months. While it is intended to ensure customers pay a fair price for their energy, it is only a cap on the most expensive tariffs and does not safeguard you against price fluctuations.
On average the cheapest tariff in market for the last 6 caps has been £280 cheaper. It’s also worth remembering that if you switch and fix, you lock in today’s price for 12 months. That means you’re protecting yourself against future price rises.
You should compare your options every year to make sure you’re on the best tariff possible. It’s estimated there are 11 million households (50% of all UK households) currently on a standard tariff who will be impacted by this cap, but they and other households could save far more by switching today. Our research estimates that consumers that have relied on the cap to keep their bills down will have paid £613 more than those who have switched once a year since the cap’s introduction in January 2019.
How the price cap affects household energy bills
What you pay for your energy depends on the network charges in the region you live.
The price cap differs by region based on this. Although as is the case at a national level, there’s always a cheaper switchable tariff in each region.4.
When there is increased demand, this triggers a rise in the wholesale prices paid by our energy suppliers – Ofgem increases the price cap to ensure these costs are passed on to consumers.
But the price of fixed-rate tariffs also reflects what’s happening to wholesale prices, and whilst energy prices have been rising again following a three-year low, substantial savings remain available to those who switch.
Why should I switch energy suppliers?
The easiest way to bring your bills down is to switch tariff. In fact, you could save at least £3065 on your energy bills when you compare energy tariffs with MoneySuperMarket.
Getting a quote only takes a few minutes. Just pop in your postcode and tell us about your energy usage. We’ll then scour the market to find the best deals for you, and show you how much you could save by switching with us. It really is that easy.
You’ll be able to compare quotes from across the market, from the Big Six to smaller companies as well as ‘green’ energy suppliers. Once you’ve found the deal you want, click through to the provider’s website to finalise your purchase and start saving.
Thanks to the Energy Switch Guarantee, your new provider will take care of all the details. Your service won’t be interrupted, and you should be on your new tariff within 21 days. So you can sit back and relax, knowing you’re another step closer to Money Calm.
Sources and methodology
All energy price cap figures are sourced from Ofgem, where comparisons have been made to the number of cheaper tariffs in the market or savings against the price cap this refers to MoneySuperMarket tariffs as of 5th February 2021.
30% of consumers that applied to switch via MoneySuperMarket could save at least £306.38, March-December 2020. Excludes NI, CI & IOM
On 1 April 2020 Ofgem decreased the Typical Domestic Consumption Values (TDCVs) for electricity to reflect continued decreases in electricity consumption, TDCV’s for gas remain unchanged. The new values are factored in to the default tariff price cap and prepayment meter cap level therefore the caps announced prior to this date may not be directly comparable.
1 All price cap data and volume of UK households on a standard tariff provided by Ofgem.
2 MoneySuperMarket tariffs as at 5th February 2021.
3 Data if an Average Consumption Customer A switched to the average of the top 10 tariffs on 1st Jan 2019 (first day of price cap) and then switched again on 1/1/20 and 1/1/21 they would be £613 better off than Average Customer B (by 30th September 2021) who did nothing and paid at the price cap.
4 Cheapest switchable tariff by region as of 5th February 2021.
5 30% of consumers that applied to switch via MoneySuperMarket could save at least £306.38, March-December 2020. Excludes NI, CI & IOM.