What does the upcoming energy price cap rise mean?

The energy price cap rise explained

As a trusted boiler installation company, its our job to keep you informed about the latest developments in the energy industry. You may have heard that in January 2024, the energy price cap is set to rise, and we understand that this news may be causing you some stress or worry. Our experts at Padly, are here to reassure you by explaining what this means for households in the UK, as well as sharing some valuable energy-saving tips to help you navigate these changes and ensure your home runs efficiently.

What is the energy price cap?

The energy price cap is a regulatory measure put in place to limit the price of a single unit of energy for customers on variable energy tariffs. Ofgem's price cap has been effective since July 1st, 2019, replacing the government's Energy Price Guarantee (EPG) as the more cost-effective option.

It's essential to clarify that the price cap is not a limit on your total energy bill. Instead, it restricts the price per unit (or kWh) that energy companies can charge. Your total bill depends on how much electricity and gas you consume.

According to Which, typical energy bills between October and December 2023 are around £1,834 per year (£153 per month). However, in January 2024, they are expected to rise to approximately £1,928 per year (£161 per month) due to a 5% increase in the price cap.

What are the new energy prices as of January 2024?

From January 1st, 2024, the energy price cap will result in an average monthly bill of £161 for the typical user, reflecting an increase of around £2.83 per month.
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For direct debit customers in England, Scotland, and Wales, the new unit rates will be approximately:

• Electricity: 28.62p per kWh with a standing charge of 53.35p per day
• Gas: 7.42p per kWh with a standing charge of 29.60p per day

For prepayment meter users, the rates will be:

• Electricity: 25.63p per kWh with a standing charge of 52.87p per day
• Gas: 6.35p per kWh with a standing charge of 32.58p per day

It's important to note that the total cost, including the unit rate and standing charge, cannot exceed the price cap.

Energy saving tips

To help you navigate the approaching energy price cap increase, our experts have shared some ways you can save energy to try and minimise the impact of these changes on your household.

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1. Invest in a high-efficiency boiler

‍Your choice of boiler plays a significant role in your energy consumption. More efficient boilers may have a higher upfront cost but can save you money in the long run due to lower energy consumption. At Padly, we're committed to providing the best boiler brands, models and types with the highest Energy Performance Certificates (EPC) ratings. Get a new boiler installation quote here today.

2. Choose the right boiler type

Consider the type of boiler that suits your needs. Combi boilers are known for their efficiency and heat water only when needed, therefore minimizing heat loss and energy costs. In contrast, system and conventional boilers store heated water, potentially leading to higher energy expenses. To understand more about the different types of boilers, read our blog.

3. Regular boiler maintenance

Ensure your boiler operates efficiently by scheduling regular maintenance. A well-maintained boiler runs more efficiently and reduces energy wastage. We recommend servicing your boiler annually to optimise its efficiency and help extend its lifespan.

4. Optimise heating controls

Installing smart thermostats and programmable heating controls allows you to manage your heating system more efficiently. You can schedule heating to match your daily routine and avoid heating an empty home.

5. Insulate your home

Proper insulation reduces heat loss, helping your home stay warm without excessive energy consumption. We recommend insulating your walls, roofs, and floors to maximize energy efficiency.

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We understand that the upcoming energy price cap rise may be causing concern, which is why we're committed to guiding and assisting you through these changes. To summarise, the energy price cap primarily limits the price per unit of energy, not your total bill, which depends on your consumption. As of January 2024, the typical monthly bill is expected to increase by approximately £2.83. To navigate these changes and ensure your home runs as efficiently as possible, consider implementing our energy-saving tips such as, investing in a high-efficiency boiler, scheduling regular maintenance and choosing the right boiler type for your home.

At Padly, your peace of mind is important to us, which is why we're dedicated to helping you make informed choices and ensure your energy costs remain manageable. Stay well-informed, prioritise efficiency, and remember you can always rely on us for expert boiler installations!