The energy price cap explained following the recent price increase
11 October 2021 - On 1st October, the new energy price cap set by the Government came into effect, bringing a rise to energy prices. Here we explain why this has happened, and how these changes affect UW customers and the tariffs they're on.
We understand that higher energy bills are never welcome but, like all other suppliers, we are affected by these higher costs and cannot avoid passing them on to our customers.
However, our new variable energy prices (which took effect from 1 October 2021) are up to 5% below the fair price set by the Government, depending on how many services you take from UW – and we promise to offer energy tariffs that are lower than the price cap for as long as you remain a customer.
Read more from Ofgem about how the price cap increases could affect you >
Why are energy prices rising?
Wholesale energy prices – the prices suppliers pay to buy energy – have risen by about 250% since January 2021. When this happens it’s usually unwelcome news for customers as it means an increase in their energy bills. Those on Variable tariffs would have recently experienced this.
What is the Government’s energy price cap?
The energy 'price cap' is the upper limit at which energy suppliers can charge customers on Variable tariffs.
The price cap was introduced at the start of 2019 by the Government. This resulted in “a fair price for energy” to make sure energy companies don’t charge their customers too much, but also that they’re able to cover their costs of buying energy.
The price cap is reviewed twice a year by the Government’s energy regulator Ofgem in April and October.
What are wholesale prices?
This is the price suppliers like UW pay to buy energy.
The graphs* below show the movement of wholesale costs since February on gas and electricity prices and their impact on the price cap.
*Source: Ofgem: Energy bills are rising – and what you can do about it article
The legal bit
I’m a UW customer – am I affected?
If you’re on one of our Variable tariffs or have a prepayment meter, then the answer is yes.
If you’re on a Fixed tariff you won’t be affected.
What do I need to do?
Nothing. By now you would have received a price increase notification from us with information on how this directly impacts you. Our core aim is to make life simpler for our customers. If you’re on a budget plan, we’ve reviewed your account to make sure that you’re paying the right amount for your energy moving forward.
When will prices go up from?
The prices took effect from 1 October 2021.
When will I see changes on my bill?
The new prices will be shown on your November bill which will cover your energy charges for October 2021.
Are all suppliers raising their prices?
Yes – all energy suppliers will be increasing their costs for customers who were impacted.
Some useful links:
More information about wholesale prices and our Fixed and Variable tariffs here.
For handy tips and information on how using less energy can help you bring down your energy costs, please visit our ‘Help and support’ page.
