Amendments to the Domestic Gas and Electricity (Tariff Cap) Act 2018 made by the Energy Prices Act 2022 came into force on 25 October 20221. The 2018 Act, which received Royal Assent on 19 July 2018, provides for a cap on rates charged to domestic customers for the supply of gas and electricity1.
The changes insert a new consideration into the duties the Gas and Electricity Markets Authority must weigh when exercising its functions under section 1. Alongside existing matters such as incentives for suppliers to improve efficiency and to compete, and maintaining incentives for customers to switch, the Authority must now have regard to "the need to set the cap at a level that takes account of the impact of the cap on public spending"1. A further provision requires the Authority, in performing that duty, to have regard to any information or guidance given by the Secretary of State on the matter1.
Section 5, which governs the publication and effect of modifications to the cap, now requires that a modification takes effect only after the end of a period of 25 working days beginning with the day it is published, replacing the previous 28 day period1. The Act defines a working day as a day other than Saturday or Sunday, Christmas Day or Good Friday, or a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom1.
Section 8, which deals with the termination of the cap, has been substituted1. Under the new provision, the Secretary of State may give notice that tariff cap conditions are to cease to have effect for all supply licences, for gas supply licences, or for electricity supply licences1. The conditions continue in the case of electricity supply licences for so long as a scheme is designated for the purposes of section 2 of the Energy Prices Act 2022, the domestic electricity price reduction scheme for Great Britain, and in the case of gas supply licences for so long as a scheme is designated for the purposes of section 3, the domestic gas price reduction scheme for Great Britain1.
A related amendment, inserted at the same time, addresses the position where the cap ceases to have effect for one fuel but continues for the other1.
Why it matters for households
The price cap is the default protection for households that have not switched to a fixed deal, and the amendments change both how it is set and how it ends. The public spending consideration gives the government an explicit role in the level at which the cap is set, through information or guidance to the Authority, rather than the cap being weighed only against supplier efficiency, competition and switching incentives1. The 25 working day rule lengthens the minimum gap between a modification being published and taking effect, which affects how quickly any change to the cap can reach a household bill1.
The substituted section 8 ties the cap's termination to the Energy Prices Act 2022 price reduction schemes, so the cap's continued existence for each fuel is linked to whether a scheme is designated for that fuel1. The Act's exemptions remain: the cap does not apply to customers covered by the prepayment charge restriction, and conditions may provide for it not to apply to customers the Authority considers vulnerable by reason of their financial or other circumstances, or to certain renewable-supporting standard variable rates1. The history of cap levels and announcement dates sets out how the cap has moved over time.
What happens next
No further commencement dates or implementation steps are set out in the text of the 2018 Act as amended1.
Sources1 cited
- Domestic Gas and Electricity (Tariff Cap) Act 2018, legislation.gov.uk