The Energy Price Guarantee: How does the freeze affect your energy bills?

The Energy Price Guarantee (EPG) will stay at £2,500 until the end of June 2023 when it'll be replaced by the energy price cap. The government announced this in March 2023.

The energy price cap reduced by £1,206 to £2,074 in May 2023, which is £426 less than the current EPG level. 

The EPG works in a similar way to the energy price cap and limits what energy providers can charge per unit of energy.

What are the energy unit prices under the Energy Price Guarantee?

These are average energy prices for the UK from 1 April. But these prices could vary depending on where you live and how you pay for your energy:

Source: GOV.UK

*This is the average price for Great Britain

Standing charges

Standing charges will also stay capped at the levels set out by Ofgem. This is a fixed daily amount that covers the cost of supplying your property with energy. You have to pay a standing charge regardless of how much energy you use.

The average standing charges from 1 April are:

• 50.4p per day for electricity 
• 27.7p per day for gas 

This applies to both fixed and standard variable rate tariffs.

Your bill and the Energy Price Guarantee

I’m on a standard variable rate tariff, how does the Energy Price Guarantee affect my energy unit rates?

If you’re on a standard variable rate tariff, your average energy unit price should be:

• 33.2p/kWh for electricity (inc. VAT)
• 10.3p/kWh for gas (inc. VAT)

Your supplier should have automatically applied these rates to your energy bill.

I’m on a fixed tariff, how does the Energy Price Guarantee affect my energy unit rates?

This depends on when you got your fixed deal, and how long it lasts for.

Your energy prices might already be below the EPG if your fixed tariff was in place before the energy crisis. This is known as the ‘floor price’, and it’s the minimum amount a supplier can charge per unit of energy. 

If you’re on a fixed rate tariff that’s below floor price you won’t get a further discount on your rates.

Floor prices vary by region, but the average for Great Britain is 34p/kWh for electricity and 10.3 p/kWh for gas.

If your fixed tariff is above floor price, your energy supplier should have automatically reduced your energy bill by:

• 16.6p/kWh for electricity 
• 2.2p/kWh for gas 

I’m on a prepayment meter and variable contract, how does the Energy Price Guarantee affect my energy unit rates?

You pay the following unit rates if you have a prepayment meter:

• 16.6p/kWh for electricity 
• 2.2p/kWh for gas

From 1 July, prepayment meter customers will pay the same amount for their energy as an equivalent direct debit customer until 31 March 2024. 

Now, prepayment meter customers are paying more for their energy than direct debit customers. The reduction was announced in the spring budget and could save prepayment customers £45 per year.

How much could I save with the Energy Price Guarantee in place?

We've looked at how much each type of home would save under the EPG compared to the Ofgem price cap:

Source: GOV.UK, based on 2019 median consumption (Dual fuel, annual basis)

What is the Energy Price Guarantee?

The Energy Price Guarantee (EPG) is a cap on the unit prices of energy. 

The EPG means that a typical UK household pays up to an average of £2,500 per year for their energy bills. This is expected to save the same household at least £1,000 a year. 

Remember, this isn’t a cap on the cost of your energy bill. The EPG limits the amount you’re charged for each unit of gas and electricity. The price of your bill still depends on your energy usage.

The EPG will be in place until the end of June 2023. Then, energy unit prices will go back to being regulated by Ofgem’s energy price cap.

The EPG was introduced because the price cap was rapidly increasing due to the rising cost of wholesale energy.

Now, wholesale energy prices are stabilising and the cost of energy units under the EPG are higher than the price cap amounts. This is why it's going back to being regulated by the price cap. 

The energy price cap is still announced 4 times a year. It decreased by £1,206 to £2,074 on the 25 May 2023. 

I pay for my energy as part of my rent, will the Energy Price Guarantee still apply?

If you’re paying for energy as part of your rent, your landlord should agree to discount your energy unit costs to the EPG amounts.

Your landlord won’t discount your energy if they’re on a fixed rate contract and the unit prices are at floor price.

Your landlord has to adhere to these rules when it comes to your energy supply:

• They shouldn’t be making a profit from your energy payments
• They should be reselling your energy to you based on your usage
• They must comply with the maximum resale price rules

The maximum resale price is the most that anyone can charge for resupplying gas or electricity that has already been bought from an authorised supplier. In short, the person reselling the energy shouldn’t be charging more than what it was bought for. You can find more information on this at Ofgem.

If you have any doubts, speak to your landlord. If this hasn’t worked, speak to Citizens Advice.

Does the Energy Price Guarantee apply to businesses?

The Energy Bill Relief Scheme is on offer for businesses. It works in a similar way to the Energy Price Guarantee by providing discounts on the price of wholesale gas and electricity for non-domestic customers. It applies to all UK businesses, charities, schools and hospitals. 

Business energy customers won't have to take any action as the energy unit discounts should be automatically applied.