The Ofgem price cap returns
From 1 July, the energy price cap set by energy regulator, Ofgem, will fall from £3,280 to £2,074. The current cap is £2,500, but this reduction will aid home-based employees and small business owners operating from residential spaces.
In October last year, the government introduced a temporary energy price guarantee that has limited the annual gas and electricity costs for a typical household. However, they will now apply the lower energy price cap of £2,074 instead, rather than increasing it from £2,500 to £3,000 this July.
Impact of the cap
The energy price cap is set quarterly. From 1 July to 30 September 2023 the limit is £2,074.
- Customers on standard variable tariffs with typical consumption will see their bills fall in line with the cut in prices.
- However, annual bills are not capped as such. Households with higher energy use will pay more than the cap, with lower energy users paying less.
The £3,000 energy price guarantee will remain in place as a safety net until 31 March 2024 just in case energy prices increase above this level.
Even with the price reduction from 1 July, energy prices will still be almost double what they were before costs started to soar.
Fixed energy deals
There are virtually no fixed energy deals currently available, although they might return now that prices have started to fall.
Energy price cap at £2,000 till March 2024. Fixed deals offer certainty but may have exit fees if prices fall before the term ends.
A government briefing of the energy price guarantee and how it operates alongside the energy price cap can be found here.
How can we help you?
Utilize price reductions and business reliefs to save and build financial reserves for uncertainties. If you need help with your business’s financial planning and forecasting, then please contact us on 01444 716946 or on 01273 963656 or alternatively email us here.
