What will the energy cap changes mean for my bills?

A significant story is unfolding on the international scene. What will the energy cap changes mean for my bills? 31 minutes ago Share Save Add as preferred on GoogleGetty ImagesTypical annual energy bills will rise by £221 to £1,862 from 1 July, the regulator Ofgem has announced. The 13% increase in the energy cap affects millions and reflects soaring wholesale oil and gas costs caused by the US-Israel war with Iran.

What is the energy cap and how is it changing? The energy cap fixes the maximum amount which customers on standard variable tariffs can be charged for each unit of gas and electricity used. It covers around 33 million households in England, Wales and Scotland and is set by the regulator Ofgem every three months.

The Details

Of the 33 million: around 19 million pay by direct debitaround 7 million pay by standard credit (they pay when they get a bill)around 6 million have prepayment metersThe typical annual usage figure applies to the first category: dual-fuel households on a standard variable tariff which pay by direct debit. Between 1 July and 30 September, their gas prices will be capped at 7. 33 pence per kilowatt hour (kWh), up from 5.

Electricity prices will be capped at 26. 11p per kWh, up from 24. It means that a typical household will pay £1,862, up from £1,641 between 1 April and 30 June.

But customers' actual bills depend on the amount of energy used and how they pay for it. The typical annual bill from 1 July for customers who pay by standard credit will be £2,005, up 13% from £1,772. The typical annual bill from 1 July for prepayment customers will be £1,812, up 13% from £1,597.

What Experts Say

Ofgem regulates the energy market in England, Scotland and Wales. Northern Ireland has a separate system. What is a typical household?

Although the price cap sets the unit prices for gas and electricity, your household's actual bill depends on the overall amount of energy you use, and how you pay for it. Where you live, the type of property you have, how energy efficient it is, how many people live there, and the weather all make a difference. The Ofgem cap is based on "typical" household energy use in a year with a single bill for gas and electricity settled by direct debit.

The vast majority of people pay their bill this way to help spread payments across the year. The regulator has previously calculated that a "typical" household uses 11,500 kWh of gas and 2,700 kWh of electricity in a year. However, it is reducing this "typical" energy use because many households have cut back due to high prices in recent years and are benefiting from improvements in energy efficiency.

The story has become one of the most prominent items on the global agenda.