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What's happening with the Energy Price Guarantee?

Here's a rundown of what exactly the Energy Price Guarantee is, how it'll affect One Utility Bill customers, and signposts to more info if you're interested.

Scroll to the bottom for information on how we'll pass this energy price freeze on to our customers. Short version: You'll get an updated price by October 1st 2022.

What is Energy Price Guarantee and what does it do?

The Energy Price Guarantee is a new government policy to tackle the cost of living crisis. It's basically an energy price freeze that stops more increases to electricity prices. This was especially important ahead of winter, when we use more energy to stay warm.

The Energy Price Guarantee means household gas and electricity bills will stay at the same rate from October 2022 until the end of September 2024. Before it was introduced, bills were due to increase in cost every three months. Most peoples' incomes would have struggled to keep up with this, so the government had to step in.

Don't worry! This extra support doesn't replace the upcoming £400 energy grant to reduce the cost of energy this winter.

What's the difference between the Energy Price Guarantee and the Energy Price Cap?

First things first, let's distinguish between these two rates. They have similar names, but their impact on what you'll pay is very different.

  • The Energy Price Guarantee replaces the Ofgem Energy Price Cap, which is protection for energy bill prices that’s been in place for years.
  • The Energy Price Guarantee is a freeze on prices until 2024, meaning that the average household will pay no more than £2500 per year until then. Energy bills in particular were increasing more than most peoples' incomes, and were a big contributor to the cost of living crisis.

While both costs are a limit on what you can be charged for the energy you use, one changes based on what your energy supplier pays to source gas and electricity, and the other doesn't.

What was the Energy Price Cap?

Pre-October 2022, the Energy Price Cap was the maximum price for electricity and gas. Suppliers couldn't charge more than this for the standard variable tariff,  their default offering since 2021. It was set every six months by Ofgem, a government regulator.

The cost of gas and electricity went up dramatically over the last couple of years, so the cap stopped being a helpful way to control prices.

The Price Cap is set in price per kWh, which is the cost per unit of energy, but you'll usually hear people talk about it using the annual cost for a typical household instead. This is what headlines referring to figures like “£1,971 a year" usually mean.

In reality, everybody's bills are different depending on how many people live in your house, and your usage. 

On the other hand, the Energy Price Guarantee has been set by the government, and won't change based on energy costs. No matter how the wholesale cost of energy changes between now and 2024, you won’t be charged more for the electricity you use.

We have a rundown of the energy crisis in our blog. It's particularly useful if you want to see how charges are calculated and the factors that contributed to wholesale energy costs getting so high.

Why did the government need to reduce energy bills?

In October 2022, gas and electricity prices were due to increase by 80%, from £1,971 to £3,549 per year. This was an increase from £0.28 per kWh to £0.52 per kWh, and more than a lot of people could afford. Prices would also have increased quarterly after that.

When the Energy Price Cap could no longer keep bills affordable, the price freeze AKA the Energy Price Guarantee was announced by the government in September 2022 to give a longer period of time before rates went up again.

The Energy Price Guarantee is still more expensive than previous prices, but is £2,500 a year for an average household bill, rather than £3,549 under the October 2022 price cap set by Ofgem.

A £1000 reduction is a relief for millions of people, but still around twice the cost of the previous winter.

With the government energy grant reducing bills by another £400 in October 2022, the price of gas and electricity over the next year will be around £2100 for the average household.

No matter what happens to the wholesale price of energy between now and 2024, your bills won't go up in price.

The graph shows government support passed on to One Utility Bill customers. A stack of coins is accompanied by "£7.6m per year through the Energy Price Guarantee and a hand with a coin shows £2.8m in 2022/23 via the £400 energy grant"

Do I get the Energy Price Guarantee?

If you're a One Utility Bill Customer, you'll get an updated price to show the prices promised by the Energy Price Guarantee before October 1st 2022.

Your monthly direct debit or card payment to One Utility Bill includes energy, among other things, so changes like the Energy Price Cap and Energy Price Guarantee affect your payments.

Just like the £400 energy grant this winter, we're passing this reduction on to you, which means everybody will get an updated, lower, quote before October 1st. 

All together, One Utility Bill customers are getting more than £2.8m in bill reductions as we pass on the £400 energy grant, and paying £7.6m less than predicted over the next 12 months thanks to the Energy Price Guarantee.

What other support do I get as a One Utility Bill customer?

The Energy Price Guarantee and the £400 grant are the only government support (at the moment) that comes through your energy company, so it's the only support we have any information on right now.

Any energy support linked to your benefits or anything else isn't handled by us, and won't affect your direct debit payment to us directly because your energy company isn't involved in how this support is given.

Unless the support comes from your suppliers, we don't have information about it.

Other resources

Our blog covering the whole crisis

Our blog about the £400 government grant

Our blog covering why the war in Ukraine increased prices

Here are some other sources of information. They're not our area, but there are experts who can help:

Citizens Advice

Ofgem

Money Saving Expert

Find your local council here, they might also be able to help 

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