The Energy Price Guarantee had held costs at £2,500 for the average household in Great Britain, and the price cap became the default price when it dropped below this level on 1 July 20231. The change means the cap, rather than the guarantee, is the mechanism that sets the default price for most households.
The guarantee had subsidised domestic energy bills during the period covered by Consumer Scotland's Spring 2023 tracker, whose fieldwork ran from 2 to 23 March 20231. That month was also the last in which households received support under the Energy Bill Support Scheme1. Consumer Scotland, the statutory body for consumers in Scotland, published the third in a series of energy affordability trackers to improve understanding of how the wider cost of living crisis is affecting energy consumers1. Its findings cover the period before the price cap became the default price:
| Measure | Spring 2022 | Autumn 2022 | Winter 2022 | Spring 2023 |
|---|---|---|---|---|
| Found it easy to keep up with energy bills | 31% | 25% | 24% | 27% |
| Found it difficult to keep up with energy bills | 33% | 35% | 35% | 36% |
| Not managing well financially | 36% | 36% | 33% | 33% |
| Using less energy than a year earlier | 35% | 61% | 56% | 50% |
| Rationing energy use because of financial concerns | 52% | 68% | 68% | 62% |
The tracker found that 62% of all consumers reported rationing their energy use because of financial concerns in Spring 2023, significantly higher than the 52% who reported doing so in Spring 20221. In Spring 2023, 38% of consumers reported that they could not heat their home to a comfortable level because of financial concern, a reduction from 43% in Autumn 2022 but still above the 31% recorded in Spring 20221. Difficulty keeping up with bills varied by payment type: 30% of those on direct debit, 43% of those on standard credit and 59% of those on prepayment meters reported difficulty in Spring 20231.
The tracker notes that the October to December 2023 cap level of £1,923 remains significantly higher than the £1,277 cap in the October 2021 to March 2022 period1. Ofgem figures cited in the tracker show domestic energy debt and arrears rose from £1.55bn in Q1 2021 to £2.25bn in Q1 2023, an increase of £700m in two years1.
Why it matters for households
The shift from the guarantee to the cap changes which mechanism sets the default price, but it does not by itself reduce what a household pays. The cap limits the unit rate and standing charge a supplier can charge on a default tariff, so the amount a home pays still depends on how much energy it uses. The typical household figure is a benchmark, not a cap on the total bill. For a home trying to reduce its exposure to price movements, the tracker's figures show that many households were already cutting consumption: half said they were using less energy in Spring 2023 than a year earlier, and 62% reported rationing use because of financial concerns1. The components of a bill and the history of cap levels set the context for what the default price now means.
What happens next
The tracker states that the new energy price cap level for October to December 2023 will drop to £1,923 per annum for the average household in Great Britain1. It adds that without further intervention certain groups of consumers are likely to continue to experience severe energy affordability challenges this winter, and that there is a growing need to address domestic energy debt and arrears1. Consumer Scotland says it will undertake further work on energy affordability for disproportionately affected groups and on improving the energy efficiency of Scotland's housing stock1. No further dated steps are given in the source.