The updated default tariff cap levels for charge restriction period 9a took effect on 1 October 2022 and run to 31 December 2022. Ofgem published the levels on 26 August 2022, covering a three month period rather than the six months used previously1.
The cap level for a dual fuel customer paying by direct debit rose to £3,549, an increase of 80% since the last update. The standard credit cap level rose to £3,764, an increase of £1,663, and the prepayment meter cap level rose to £3,608, an increase of £1,5911.
| Payment method | Cap period 9a level | Change |
|---|---|---|
| Direct debit | £3,549 | Up 80% since the last update |
| Standard credit | £3,764 | Up £1,663 |
| Prepayment meter | £3,608 | Up £1,591 |
Ofgem said the main driver was wholesale costs, which rose by £1,391 since the last update, primarily due to the invasion of Ukraine by Russia and the subsequent political fall-out. It also allowed £46 per customer per year for unexpected standard variable tariff demand costs incurred over cap period eight, and £143 per customer per year for backwardation costs1.
"From 1 October 2022, the level of the cap will increase to £3,549."
Ofgem states that the cap sets maximum prices, not maximum bills, and that what an individual customer pays varies with how much energy they use, where they live and how they pay. The cap level does not depend on who the supplier is. Ofgem does not set a dual fuel cap; caps are set for each fuel separately, and the dual fuel figure is the combined effect of the gas and electricity caps at typical consumption1.
Customers paying by standard credit pay an additional £215 compared with direct debit, primarily based on the higher cost for suppliers to serve them. Prepayment meter customers pay an additional £59 compared with direct debit. Ofgem said a review of smart metering costs reduced the gap between prepayment and credit by around £7, and that the unexpected standard variable tariff cost allowance of £43 does not apply to the prepayment cap1.
Why it matters for households
The cap level is a maximum unit rate and standing charge, not a ceiling on the total bill, so a household using more than the typical consumption values will pay more than the headline figure. The gap between payment methods is set out in the price cap rates by payment method, and the reasons one method costs more than another are covered in standard credit vs direct debit and prepayment vs direct debit. No application is needed to be covered by the cap, as explained in do I need to do anything to be covered by the price cap?, and the common reasons a bill can exceed the cap figure are set out in why is my bill higher than the cap figure?.
For a household's energy independence, the level matters because it fixes the maximum price for the quarter, so the cost of each unit of gas and electricity used at home is known in advance for that period. It does not change how much energy a home uses, and it does not cover heating oil, which is not part of the cap. The full sequence of levels and announcement dates is set out in the price cap history.
What happens next
The cap period 9a levels apply from 1 October 2022 to 31 December 2022. Ofgem decided in August 2022 that the cap will be updated quarterly rather than every six months, so the next level covers the three months from 1 January 2023. The next level has not been reported in this document.
Sources1 cited
- Default tariff cap update from 1 October 2021, ofgem.gov.uk