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- OFGEM Price Cap Rise
What we know
The current price cap is set at £1,900 a year. This was a 54% increase on the October 2021 price cap. Remember that this figure is not the maximum that you will pay, rather it is the cost that the average consumer will pay. This came into effect in April and most people are currently on this tariff.
The cap is made up from the unit rates and standing charges for gas and electricity. This cap is
- Electric 28p per unit
- Gas 7p per unit
OFGEM has changed how this cap is calculated in an effort to pass price changes along to customers faster. Instead of the price cap being decided every six months, it will instead be changed every three. This means that there will be four price changes a year rather than two, October, January, April and July.
October and January Price Cap
Octobers price cap has been in the news as we approach the date that the new cap is to be announced (August 26th). We currently do not know how this cap will be broken down, but the latest prediction is that in October the prices will go up to £3,500 (up 84%), more than predicted earlier this year by OFGEM when the cost of living package was decided.
Januarys price cap is yet to be decided but predictions are being mentioned as we are getting closer to the October announcement. The current prediction for Januarys cap is £4,200 (up 19%). This cap has not been decided on yet but this figure is likely to be the one being used by the news as a best estimate.
Martin Lewis has been updating his website regularly with any suppliers that may have fixed tariffs available for existing customers that could be worth it if you value budgeting certainty. We’ve linked the website here so that you can see if you could benefit from them. (Last update 09 August 2022)
If you pay for your energy by direct debit, you can be proactive. Octopus are now helping you calculate roughly what your direct debit will go up to in October and you can choose to start increasing your direct debit gradually now to lessen the price shock that may happen in October. There is nothing stopping you from doing this even of you are not with Octopus.
Remember! There is support coming in the form of the £400, energy rebate as well as one off payments for those on low incomes, disability benefits or receiving a pension. There is also an expansion of the Warm Home Discount including a widening of the core group.