What is the Energy Price Cap, and how is it calculated?
The Energy Price Cap was introduced on 1st January 2019 by the Energy Regulator Ofgem, with the goal of ensuring households who fall onto suppliers’ variable tariffs are not overpaying for their energy.
The Energy Price Cap limits the p/kWh households pay for Gas & Electricity consumed, as well as setting a maximum limit for the Daily Standing Charge. It is based predominantly on the Overall Wholesale Price of Energy and applies to suppliers Out of Contract (Standard & Default) tariffs.
The level is calculated by Ofgem and placed into law by Government to protect consumers from short-term price changes when they move onto their suppliers Out of Contract tariffs. Ofgem confirms the maximum level that all suppliers must apply to these types of tariff.
The price cap is reviewed and revised every quarter (3 months), after previously being set every 6 months, to protect against suppliers collapsing.
The Energy Price Cap is published as an annual spend, based on Ofgem’s figures for a typical dual-fuel property, however it’s the p/kWh that is fixed. With this being the case, the actual spend limit varies depending on actual usage.
Why are Businesses not protected by the Energy Price Cap?
Ofgem’s Energy Price Cap has unfortunately never been used to guide Commercial Energy Agreements, as prices are secured on the Live Wholesale Market.
The benefit of this is Commercial Energy Agreements secured, are based on live pricing, rather than when the Energy Price Cap is reviewed every 3 months.
When Wholesale Prices are declining this is an extremely beneficial way of purchasing, however in this current period of Rising Costs, it unfortunately means levels can increase without a limit.
Is there anything Commercial Businesses can do to reduce their Energy Costs?
Currently, Wholesale Energy Prices are ever increasing, causing issues for businesses with current & future budgets. CostAdvice – Energy Specialists are here to help with our no obligation health check on all Commercial Energy Supplies.
Why is an energy health check important?
- Not all Commercial Energy Agreements are the same.
- Furthermore, not all businesses should be charged the same costs.
- Our No Obligation heath-check looks deeper, than just your current charges and agreements.
We recently identified £10,000 of annual savings for a group of Museums that were already being looked after by another Energy Consultant.
To proceed, or for further information, please contact Daniel Walker on 01246 252788 or send him an e-mail to daniel.walker@costadvice.co.uk, whereby he will be happy to help.
