Latest energy price cap news has been a hot topic of conversation for the last several weeks and has left many homeowners with questions around what the price increase means for them.
The energy price cap is the maximum that a utility company is able to charge a customer living in the UK, per year.
Many factors are contributing to the rising cost of living in the UK, the increase to energy price cap is certainly the most cited.
What is the energy price cap?
The energy price cap is the maximum that a utility company is able to charge a customer living in the UK, per year.
The increase also impacts the standard daily charge - this is the cost charged to a home for being connected to the national grid.
When was the energy price cap introduced?
The energy price cap increased on 1st April 2022 following a government announcement on 3rd February.
The concept initially introduced in 2019, is reviewed by ofcom every 6 months.
How much have energy bills increased?
The energy price cap has risen from an average of £1,277 per year to £1,971 per year - an increase of 52%.
Why prices increased
The main dictating factor in energy price rises is due to the surge in natural gas prices, having climbed four times its previous cost.
Around 85 per cent of UK homes are powered by gas boilers but Britain has much less gas storage capability than other European countries, meaning it is more susceptible to spikes in prices.
How does the price cap impact bills?
Ofgem have annouced that the price cap will impact roughly 22 million customers. How the changes will impact individual households will differ, but the good news for new build home owners is that energy bills are approximately £400 per year cheaper than older homes, which stands to jump upto as much as £800 savings as energy prices rise, making new build homes that much more appealing to prospecting buyers.
