Energy Price cap to increase by 54% as of April 2022.

Ofgem published a worrying 54% rise in the energy cap starting in April 2022. Under the previous energy cap, companies could impose a maximum rate of £1,309 for prepayment plans and £1,277 for direct debit plans. However, with the updated cap, companies can now ask £2,017 for prepayment plans and £1,971 for direct debit plans.

Updated average Energy Cap
Payment Type New Energy Cap New Energy Cap per kWh Old Energy Cap Old Energy Cap per kWh %increase
Direct Debit Total £1,971* £1,277* +54.34%
Direct Debit Electricity £812* £0.28 per kWh £609* £0.21 per kWh
Direct Debit Gas £840* £0.07 per kWh £480* £0.04 per kWh
Prepayment Plan Total £2,017* £1,309* +54.08%
Prepayment Plan Electricity £835* £0.29 per kWh £629* £0.217 per kWh
Prepayment Plan Gas £863* £0.072 per kWh £492* £0.041 per kWh

* $TDCV_warning$

What is the energy price cap?

In January 2019 Ofgem introduced the Energy Price Cap as an upper limit on the prices that energy companies can charge per kWh of electricity and gas. The energy cap prevents energy companies earning excessive profits on the back of customers.

Is the energy price cap equal throughout the UK?

No the Energy price cap can be different across regions. The UK is split up in 14 unique regions. In each region, suppliers offer three energy fuel types; single rate electricity, dual rate electricity & gas. Each of these fuel types have three different price caps that correspond with three different payment methods. The three payment methods are standard credit, prepayment, and “other payment methods” (including Direct Debit). Click here to check the average cap of your payment type and your region.

Why does the Energy Price Cap exist?

In January of 2019, Ofgem intervened to limit the energy prices in the UK market to prevent fuel poverty levels in the UK from rising rapidly. The cap assures that companies can charge a fair price based on their cost structure, but cannot overcharge customers purely for profit-maximization purposes.

What happens if companies don’t obey the Energy Price Cap?

The Energy Price Cap is obligatory, companies unauthorized to do so face severe consequences for breaching the Energy Price Cap.

Does the Price Cap have negative consequences?

The energy cap is designed to protect consumers, but is there a downside to this cap?

One voiced concern is that companies will not take the extra money to face reduced revenues out of executives’ bonuses. It’ll be taken out of crucial areas like research and development. In an age where greener energy is a high priority for energy companies and consumers alike, it’s important to be able to invest sufficient capital into finding new ways to create cleaner, greener energy without relying on finite natural resources.

To address these concerns, Ofgem looks at a plethora of factors to make sure that the Energy Price Cap both gives consumers a fair price and allows companies to invest ample resources in developing innovative strategies to make the energy market more sustainable. Ofgem uses data on energy costs and company financial publications to carefully calculate the price cap. You can find out more information about this here.

No more overspending on your energy!

Is your bill ever increasing despite the Energy Price Cap? We can help!

The Energy Price Cap ensures that energy companies charge fair prices, however, that doesn’t imply that your bills cannot be cheaper!

We can help to manage every aspect of your move from end-to-end. No hassle, no headaches… All you can have to do is sit back. Relax. And enjoy your incredible energy savings that are well below the Energy Price Cap!

Available Monday to Friday from 8.30 am until 5.30 pm

Updated on 8 Aug, 2022

redaction Meet the content team


Energy Specialist & Copywriter