Ofgem announced earlier in February 2022 that the default tariff cap would rise by 54% from April, the regulator's routine six-monthly determination of the maximum prices suppliers can charge on default tariffs1. The Welsh Government, publishing its second supplementary Budget on 15 February 2022, described the increase as already confirmed and set out a support package in response1.
National Energy Action (NEA), the fuel poverty charity, said the announcement meant average bills for direct debit and standard credit customers across Britain could soon reach up to £1,971, an increase of over 54% compared with bills at the time2. For the more than 4.5 million customers on prepayment meters, it said the rise was higher, up to £2,017, an increase of over £7082. NEA added that the cost of heating an average home would have doubled in 18 months, and projected that the number of households in fuel poverty would rise from 4 million to 6.5 million across the UK in the six months from October 2021 to April 20222.
The Welsh Government said its package amounted to more than £330m, including a £150 cost-of-living payment for households in council tax bands A to D and those receiving support through the Council Tax Reduction Scheme in all bands, at a total cost of £152m, plus £25m in a discretionary fund for local authorities1. It also cited more than £100m for the Discretionary Assistance Fund and the Winter Fuel Support Scheme in 2022-23, the latter providing a non-repayable £200 payment towards energy bills for people on low incomes1.
"This crisis is set to worsen from April as households feel the impact of the 54% increase in the energy price cap rise, which was announced by OFGEM earlier this month"
The Welsh statement also noted the UK Government's £200 rebate on electricity bills in October, adding that £40 would be added to every electricity bill each year for five years and that the rebate would have to be repaid by all bill payers1. NEA described the same scheme as a "rebate and clawback" arrangement, with suppliers provided with loans to fund rebates that would need to be paid back in years to come, and said the gap for prepayment customers between the October 2021 and April 2022 increases and the new measures was over £500 a year2.
| Customer group | Figure cited | Source |
|---|---|---|
| Direct debit and standard credit, average | Up to £1,971, over 54% higher | NEA2 |
| Prepayment meter, over 4.5 million customers | Up to £2,017, over £708 higher | NEA2 |
| Welsh cost-of-living payment | £150, bands A to D and Council Tax Reduction households | Welsh Government1 |
| Welsh Winter Fuel Support Scheme | £200 non-repayable, low incomes | Welsh Government1 |
Why it matters for households
The cap limits the unit rates and standing charges a supplier can apply on a default tariff, so a 54% rise in the cap level feeds directly into what a household pays for the same gas and electricity. The figures above are averages for typical consumption, not ceilings on individual bills: a home that uses more, or is on prepayment, can pay more. For a household's energy independence, the practical effect is that the cost of each unit of energy bought in, whether from the grid or a supplier, has risen sharply, and the support payments described are one-off or time-limited rather than a change to the underlying price. The price cap is set from wholesale cost forecasts, and the wholesale prices behind this increase are covered in more detail elsewhere on the site.
What happens next
The Welsh Government said the second supplementary Budget would be published on 15 February 2022, and that the Minister for Social Justice would make a further announcement on the Discretionary Assistance Fund and the Winter Fuel Support Scheme1. A cost-of-living summit with social partners and third sector organisations was scheduled for the Thursday of that week1. The cap increase itself takes effect from April 20221.