Energy Saving

Navigating the energy price cap: implications for households

Published on
July 26, 2023
Woman sitting on kitchen floor organising energy bills

As a leading boiler installer, we keep our finger on the pulse of all things energy, helping to keep you in the know and your home running efficiently.

What is the 'energy price cap?'

The 'energy price cap' is a rule that sets the highest price energy suppliers can charge for each unit of energy used. As of July 1st, this cap has been lowered. This means UK households can expect lower energy bills. The energy regulator, Ofgem, now estimates the average yearly gas and electricity bill to be £2,074. This is a drop from previous years when the government had an 'Energy Price Guarantee' that capped bills at £2,500.

How it works: The energy price cap

In England, Wales, and Scotland, the energy price cap determines the costs of variable tariff energy deals. This cap changes every three months under Ofgem’s direction. When the situation in Ukraine caused energy prices to rise, the government set a limit to protect households. It's important to note that Northern Ireland operates differently, and bills are usually lower there.


Global impact on energy prices

Predicting the trajectory of energy bills is a complex task due to the influence of global issues, such as the war in Ukraine. Ofgem does not anticipate a return to pre-covid energy prices until the end of the decade at the earliest.

Energy usage and household bills

The calculations for a typical household are based on a direct debit customer using 12,000 kWh (kilowatt hours) of gas and 2,900 kWh of electricity a year. However, most households aren't typical. Your bill depends on how much energy you use, which in turn depends on how many people live in your house, the type of property, and its energy efficiency. The average household usage is calculated based on a customer using 12,000 kWh of gas and 2,900 kWh of electricity annually.


Payment methods affect cost

For those using prepayment meters, the cap should be the same for both forms of payment. However, those who pay via cash, cheque, or bank transfer, typically every three months, will pay significantly more. Ofgem argues these customers are more likely to fall into arrears.


Fixed deals and variable tariffs

The reduction in prices should signal the resumption of competition in the market, as suppliers start to offer fixed deals to customers. This means people will be able to switch supplier for a gas and electricity price that is set for a certain period of time. Unlike variable tariffs, these are unaffected by the cap.

Consumer groups and regulators suggest that this could be good news for consumers, but caution that such deals will not suit all circumstances. If variable deals continue to fall in price, anyone who locks into a fixed deal would miss out on those savings. Anyone considering signing up for a fixed deal should also pay close attention to standing charges and exit fees, rather than just the headline rate. In conclusion, while the energy price cap drop is good news for consumers, it's essential to understand how it impacts your energy bills and boiler installation costs. Always consider your household's specific energy needs and consult with a trusted boiler installation company like Padly for personalized advice.

How does this affect my boiler installation?

In the context of boiler installation, understanding these energy price changes is crucial. The cost of running your boiler contributes to your overall energy bills. Therefore, when planning a boiler installation, consider the energy efficiency of the model you choose. More efficient boilers may have a higher upfront cost but could save you money in the long run due to lower energy consumption.

Furthermore, the type of boiler can also impact your energy costs. Combi boilers, for example, are known for their efficiency as they only heat water as and when needed. System and conventional boilers, on the other hand, store heated water which can lead to heat loss and higher energy costs.

Luckily at Padly we understand how important being energy efficient is in the current climate to our customers which is why we committed to only providing the best boilers with the highest energy performance cerftificates EPC rating. Browse our boiler installation options and boiler catalogue here to find out more.

Spread the cost with Padlys 0% APR finance options

Logic System combi boiler with 0% finance offer from Padly

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