Ofgem's energy price cap.

Ofgem's price cap.

On 25 May 2023, Ofgem announced that the price cap would decrease from £3,280 to £2,074 from 1 July 2023.

Ofgem’s price cap sets a maximum unit price that energy suppliers can charge customers for each kilowatt hour of energy they use on a standard variable tariff (SVT). This new level from 1 July 2023 will bring the price cap below the level of the government’s Energy Price Guarantee (EPG). This means the EPG no longer applies and the price cap will now determine how much energy companies can charge. It effectively ends the government’s financial support for residential energy bills.

From 1 July the price per kilowatt hour (KWh) for customers on the default tariff will be 30p per KWh for electricity and 8p per KWh for gas. The daily standing charge will be 53p for electricity and 29p for gas.

The price cap applies to customers on a SVT. If you’re on a fixed tariff, the price cap won’t affect you. You can log in to your account and see which tariff you're on.

The next price cap review is in August and will be effective from 1 October 2023.

What this means for customers.

Standard variable tariff (SVT) customers.

Customers on a standard variable tariff (SVT) will see their unit prices drop to be in line with those set by Ofgem from 1 July 2023.

The specific unit rates each customer sees will vary by region and payment type. This is to reflect the different costs to suppliers of providing energy to homes and servicing the different payment methods. The regional variations for electricity, and payment type variations, have been adjusted by Ofgem in the most recent price cap calculations (26 May 2023). 

We will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of the price drop set out by Ofgem’s price cap.

Fixed tariff customers.

Fixed tariff customers will no longer see the government’s support from the Energy Price Guarantee (EPG) on their tariff and will revert back to the prices they agreed when they took their contract out. Fixed customers do have the option to switch to the Next Flex tariff.

Prepayment meter customers.

For prepayment meter customers, Ofgem's price cap will be applied to the price you pay for each unit of energy. The unit price varies regionally, by payment method and depends on the time of day that the energy is used but the new unit prices will fall in line with the price cap from 1 July 2023.

All customers will see a decrease in their unit prices from 1 July 2023. For E7 customers there will be a decrease to both day and night unit prices.

On 15 March 2023 the Chancellor announced in the Spring Budget that people using prepayment meters will receive additional support from 1 July 2023 to bring their bills in line with people who pay by Direct Debit. This means that from 1 July a typical customer on a prepayment meter will pay the same amount as an equivalent customer paying by Direct Debit until 31 March 2024.

This will be delivered through the Energy Price Guarantee by providing a unit rate discount. The discount incorporates the differences between prepayment meter and Direct Debit costs in both unit rates and standing charges.

From 1 July to 30 September 2023, the Energy Price Guarantee prepayment meter discount will be applied to gas unit rates only, as the combined unit rate and standing charge for electricity prepayment meters will already be less than the equivalent for Direct Debit. The gas unit rate discount will therefore be (excluding VAT):

0.249p/kWh for gas from July to September 2023. The specific prepayment meter unit rate each customer sees will vary by region. See the full list for July-September 2023.

The discount will be reviewed every 3 months in line with future changes to Ofgem’s price cap. The discount will be applied automatically to the price that is set on the meter. You do not need to contact your supplier to apply or use vouchers.

Standing charges.

From 1 July the price per kilowatt hour (KWh) for customers on the default tariff will be 30p per KWh for electricity and 8p per KWh for gas. The daily standing charge will be 53p for electricity and 29p for gas.

For a typical variable dual fuel customer paying on receipt of bill (cash/cheque), average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 April 2023, at 56.7p per day for electricity and 32.7p per day for gas.

Energy Price Guarantee.

To limit the amount customers' bills go up by, the government will compensate energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers. From 1 October 2022 the government will supplement what customers pay for energy which means that a typical household will see an annual bill of £2,500 until 30 June 2023. The government says that it will pay for the subsidy, which means that customers will not be expected to repay the support.

​​​​​​​You will still pay for the gas and electricity you use. But the government's Energy Price Guarantee will limit the price that we can charge for each unit of energy. However, if you use more gas or electricity, you will pay more. The scheme doesn't cap your bill at £2,500, your bill amount is still based on how much energy you use. Visit our dedicated Energy Price Guarantee page for full information on how the EPG affects customers. With Ofgem’s new price cap (£2,074 announced 25 May 2023) dropping below the government’s EPG (£2,500) from 1 July, it effectively ends the government’s financial support for residential energy customers. Customer’s prices will now be determined by Ofgem’s price cap. The government says the EPG will remain in place until April 2024 but will rise to £3,000 from 1 July 2023.

What is the price cap?

The price cap was introduced by the government in 2019 as backstop protection for customers who are on an energy tariff with standard variable rates. Electricity and gas prices are reviewed and updated by the energy regulator Ofgem.

The price cap is calculated and set by Ofgem to reflect changes in industry costs and the graph below shows how these have changed since the last review. The price cap level is set for customers in England, Wales and Scotland. Retail energy prices in Northern Ireland are not subject to a cap. Ofgem review the price cap every three months.

How will the Energy Bills Support Scheme work?

In May 2022 the government announced several support measures to help households with rising energy bills. The main measure, announced by the Chancellor, is £400 off electricity bills for domestic customers across England, Wales and Scotland. Known as the Energy Bills Support Scheme (EBSS) this money will start to be credited to customers accounts from 1 October 2022. This money does not need to be paid back. There’s more information on our dedicated Energy Bills Support Scheme webpage.

You'll see a discount of £66 applied to your energy bills in October and November, and £67 a month from December to March 2023. The scheme ended on 31 March 2023.

We'll be paying the money differently, depending on how you pay for your fuel now:

• Fixed Direct Debit customers will receive the money automatically as a deduction to their monthly Direct Debit.

• Pay on receipt of bill customers and regular cash payment customers will see the money automatically applied as a credit to their energy accounts in the first week of each month. This will show as a credit in the payments section of their monthly bill.

• Smart prepayment customers will see the money credited directly to their meters as a top up in the first week of each month.

• Traditional prepayment customers will be provided with vouchers usually by the middle of each month. You'll need to redeem these at your usual top-up point in a similar way to the Warm Home Discount.

The government has published more information about the Energy Bills Support Scheme on their website.

What other measures are there? 

• A £900 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits. This is an increase from £650 for the last year. The first payment of £301 will be made in the spring, £300 in the autumn and a final £299 in the spring of 2024.

• 6 million households with disabilities will receive a £150 cost of living payment in the summer (same as 2022).

• 8 million pensioner households will receive £300 (same as 2022) during the winter of 2023-24.

• The £400 discount off energy bills (EBSS), which was paid in monthly instalments over the winter, won’t be continued.

The above measures announced by the government are for the tax year 2023-24 were announced in the Autumn Statement (17 November 2022). These took effect on 5 April 2023.

Am I affected by the price cap?

The price cap applies to you if you're on one of our standard variable tariffs. Since October 2022 residential customers have been protected from the price cap rises by the government’s Energy Price Guarantee (EPG). However, with the new price cap (£2,074) dropping below the EPG, customer’s bills will once again be determined by Ofgem’s price cap from 1 July 2023.

What support is available for E.ON Next customers?

This is a worrying time for everyone as the cost of energy continues to go up. We understand that you may be struggling to pay and have a number of resources to help. 

How can I get help from you with making this decision?

We recommend checking your tariff online at the end of the month once any new prices have been set and waiting to contact us until then.

You can get advice from our Energy Specialists on social media at Facebook, Twitter and WhatsApp. Our E.ON Next Community is also a great place to find support from other E.ON Next customers. 

More of your price cap FAQ.

You’ll find more answers in our FAQ below which our Energy Specialists regularly update to help support our customers. You can also stay up to date by following us on Facebook and Twitter.