Ofgem announced on 27 February 2023 its quarterly update to the energy price cap for the period 1 April to 30 June 20231. From 1 April the cap will be set at an annual level of £3,280 for a dual fuel household paying by direct debit on typical consumption, a reduction of almost £1,000 from the current level of £4,2791. The £3,280 figure indicates what consumers on their supplier's basic tariff would pay if the government's Energy Price Guarantee (EPG) were not in place1.
From 1 April the government has set the EPG at £3,000 for the typical bill, meaning consumers will not pay the full level of the energy price cap1. Bill-payers will continue to receive additional support via the EPG until the end of March 2024, as confirmed by the Chancellor on Thursday 17 November 20221. The level of that support is set by government, while Ofgem administers the scheme and publishes cap rates quarterly1.
The cap is a cap on unit price, not on total bills, and varies by how a household pays. Ofgem gave these levels for typical dual fuel consumption1:
| Payment method | Previous cap | From 1 April 2023 |
|---|---|---|
| Direct debit | £4,279 | £3,280 |
| Standard credit | £4,533 | £3,482 |
| Prepayment meter | £4,358 | £3,325 |
For a typical direct debit customer, the equivalent per unit level from 1 April is 51p per kWh of electricity with a standing charge of 53p per day, and 13p per kWh of gas with a standing charge of 29p per day1. Electricity-only Economy 7 customers paying by direct debit see a fall of £695, from £2,988 to £2,282 for typical consumption of 4,200 kWh1. The price cap protects around 27 million customers on default or variable rates, including around 4 million prepayment meter customers1.
Ofgem chief executive Jonathan Brearley said the cap had not yet fallen below the planned level of the EPG, so on current policy bills would rise again in April1.
"However, today's announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won't make an immediate difference to consumers, it's a sign that some of the immense pressure we've seen in the energy markets over the last 18 months may be starting to ease."
Why it matters for households
The gap between the cap and the guarantee is the practical point. Because the EPG sits below the cap, the unit rates a household actually pays are set by government support rather than by the cap itself, and that support is confirmed only to the end of March 20241. The cap level matters for what happens when that support ends or changes. Ofgem also notes the cap limits unit rates and standing charges, not the size of a bill, so a household's total still moves with how much energy it uses1. Ofgem said there was no immediate action for consumers to take as a result of the announcement1. The price cap rates by payment method differ, and standing charges form part of the capped unit rate. Ofgem said it believed there was a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations1.
What happens next
The next quarterly price cap update will be on 25 May 20231. EPG support continues until the end of March 20241.