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What is the new energy price cap? What does it mean?



4 minute read

You may be wondering about the new energy price cap and how it will impact your energy costs. In this article, we take a look at the regulatory change and what it actually means for your day to day life.

The UK Ofgem energy price cap explained


Ofgem is the United Kingdom’s government regulator for the energy industry. Ofgem’s main job is to ensure that regulations are put forth so that gas and electricity consumers are treated fairly. In the UK, we have one of the largest varieties of energy supplies in the world, so regulation is very important. By forcing all suppliers to stick to certain rules, we can ensure no companies, big or small, play unfairly.

The energy price cap is a new regulation introduced to the UK by Ofgem, but the rules of it aren’t completely clear. Firstly, the new cap is only applied to certain situations. These situations include the following:

  • You use a prepayment meter

  • You get the government’s Warm Home Discount

  • You use a ‘standard variable’ energy tariff or a default tariff

Unfortunately, you will not be included in the new price cap if any of the following applies to you:

  • You are on a fixed-term energy tariff

  • You actively chose to sign up to a renewable energy tariff (standard variable)

For now, renewable energy tariffs are exempt from the new price cap because renewable energy can in many cases be more expensive for the supplier. If you do fall under the cap, the amount you pay per year isn’t actually capped to a specific number like you’d assume. Instead, the price per unit of energy (kWh) is capped instead. The amount it is capped to depends on your location. You can find out more by visiting the Ofgem price cap page.

The number £1,137 has been thrown around a lot, with many assuming this is the energy price cap. This is not true. In fact, that is just the average expected cost for those that are on the cap. The amount you pay depends on your own usage. If you use more energy than the average person and you are on a tariff that hits the price per kWh cap, you’ll spend more than £1,137.

How to save more after the new 2019 energy cap

light bulb

With the above information in mind, it’s clear that the cap won’t make that much difference to most consumers. The energy price cap been put in place to stop energy suppliers from overcharging unaware or uneducated customers. For the average person, or the finance savvy, (that’s you!) it’s unlikely to impact you. Thankfully, you still have many options when it comes to saving money after the new 2019 energy cap. Let’s take a look at some of the best options available.

Lower your energy usage

washing machine

Regardless of how much you pay per kWh, you need to reduce your energy usage if you want to save the most money. You can save the most by being energy conscious.

  • Turn off standby appliances and electronics, and always switch off lights if you aren’t using that room.

  • Switch to LED lights to save money when you are using lights, too.

  • Close the doors in your home. Heating circulates better in smaller spaces.

  • Smart thermostats and smart plugs can help you to automate lower energy costs.

  • Turn down your heating, just a little. One degree can save £75 a year.

  • Spend less time in the shower - just one minute less per person can add up.

  • Wash at lower temperatures, use less water in your kettle, and use your plug in the sink to save even more.

Overall, you’ll see that many of these tips are all about being conscious about the way you use electric and gas. All of these are common sense tips but it takes being mindful to put them into action. You can create your own tips by looking around your home and noting when electric or gas is being used when it doesn’t need to be.

Forget the cap, find a better deal


The important thing to note about the cap is that it’s a set price per kWh that all suppliers have to stay under. Whilst one supplier may stick to that cap in your area, there are likely to be many more suppliers that don’t even come close to the cap.

So, like previous years, the best thing you can do to save money is to find a better deal through a price comparison tool.

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Written by zerodudex333

Ollie is a big mobile/tech fan. Follow his Twitter and his Instagram travel account