Ofgem has said its next quarterly update to the energy price cap will be on 25 May 20231. The announcement of the date was made in the regulator's press release of 27 February 2023, which set out the cap level for the period 1 April to 30 June 20231.
For that April to June period, the cap was 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 previous level of £4,2791. Ofgem stated that 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 place, and that the government has set the EPG at £3,000 for the typical bill from 1 April, meaning consumers would not pay the full level of the price cap1.
The cap level varies by payment method and meter type. Ofgem gave the following figures for typical dual fuel consumption1:
| Payment method or meter type | Cap level from 1 April 2023 | Change from previous level |
|---|---|---|
| Direct debit | £3,280 | Down almost £1,000 from £4,279 |
| Standard credit (cash or cheque) | £3,482 | Down £1,051 from £4,533 |
| Prepayment meter | £3,325 | Down £1,034 from £4,358 |
| Electricity only, Economy 7, direct debit | £2,282 | Down £695 from £2,988 |
Ofgem said the price cap protects around 27 million customers on default or variable rates on credit meters, including around 4 million prepayment meter customers, and that around 4 million customers were on fixed tariffs1. The per unit level of the cap for a typical direct debit customer from 1 April was given as 51p per kWh for electricity with a standing charge of 53p per day, and 13p per kWh for gas with a standing charge of 29p per day1. Ofgem stated the cap is a cap on unit price and standing charges, not on total bills, so what an individual household pays varies with how much energy it uses, where it lives and how it pays1.
Ofgem CEO Jonathan Brearley said:
"Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the Energy Price Guarantee. This means, that on current policy, bills will rise again in April. I know that, for many households this news will be deeply concerning."
Ofgem said there was no immediate action for consumers to take as a result of the announcement1. The regulator also said it believed there was a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations1.
Why it matters for households
The 25 May date is when the level of the energy price cap for the following quarter becomes known. Until then, households on default or variable tariffs, which Ofgem put at around 27 million customers1, have no confirmed figure for what the unit rates on their default tariff will be from 1 July. The cap does not fix a household's bill: it limits the unit rate and standing charge a supplier can apply, so total cost still tracks consumption1. The EPG, which Ofgem describes as a government support measure with the level of support decided by government, sat below the cap level from 1 April, so the cap figure alone did not determine what consumers paid1. Ofgem said bill-payers would continue to receive additional support via the EPG until the end of March 2024, as confirmed by the Chancellor on 17 November 20221. For a household weighing a fixed tariff against staying on the price cap, the 25 May announcement is the next point at which the default option's price is known. Ofgem's own figures show around 4 million customers were on fixed tariffs, against around 27 million on default or variable rates1.
What happens next
Ofgem will publish the next quarterly price cap update on 25 May 20231. The level announced then applies to the charge restriction period beginning 1 July 2023. The EPG support is stated to run until the end of March 20241. No further dates beyond 25 May 2023 are given in the announcement.