25 August 2023: Ofgem has announced that from 1 October 2023, the energy price cap will fall to £1,923 a year for a typical household.
We’ll be contacting our customers on a variable tariff shortly to let them know how this impacts them.
Below is more information about the price cap, along with answers to some questions you may have.
The price cap sets a limit on the maximum amount suppliers can charge for each unit of gas and electricity and sets a maximum daily standing charge (what you pay to have your home connected to the grid). The cap applies to all residential customers not on a fixed tariff and is there to protect consumers, with Ofgem reviewing the cap four times a year – January, April, July and October.
After October, the next price cap will come into effect in January, with the announcement on the new prices expected in November. We'll keep everyone informed on the prices and any changes when they are announced.
The Energy Price Guarantee (EPG) is separate from the cap and was introduced by the Government in October 2022 to protect consumers from rising energy costs by discounting the typical annual cost of energy to £2,500. As the energy price cap has now dropped below this threshold, the discount being provided by the government has dropped to zero. Nonetheless, it is important to remember that energy bills remain higher than before the cost of living crisis and that families across the UK continue to need our support.
The scheme will remain in place until March 2024 and could provide future discounts in the unlikely event that rates rise significantly in the next 6 months.
This figure is based on a typical household who uses 2,900kwh a year of electricity and 12,000kwh for gas and pays by direct debit. The more energy you use, the more you will pay, the less you use, the less you pay. But the rate you pay ‘per unit’ will be lower.
If you’re a UW customer on a variable tariff, then the answer is yes.
Nothing, We’ll be contacting customers on a variable tariff shortly to let you know your new prices.
New prices following the changes to the price cap come into effect on 1 October 2023.
You’ll see a change in your November bill for all charges after 1 October.
If you pay by Budget Plan, we don’t plan to review your payments following the price change. If you are due an annual review or we believe one is required, this will go ahead as planned and will be calculated using our most current rates. We will alway notify you in advance of changing your payments.
For those on a fixed tariff, the new price cap doesn't affect you as the tariff you're on is already below the new price cap so nothing will change.
Your rates will also drop on 1 October 2023.
If you have a smart meter we will automatically send your new prices to your meter, you don't need to do anything.
If you have a traditional prepayment meter, one that needs you to use a key or card to top up in a store, your new rates are added to your meter when you top up through your key or top up card. So all you have to do is top up as normal.
Yes, the Ofgem price cap is updated every three months. Once we know what these new prices are, we'll be in touch with our impacted customers to explain what this means to them. At the moment, we don't have any information about future prices.
In August last year, wholesale prices – the amount energy suppliers, like UW, pay for the energy they provide to consumers – reached all-time highs. Some of the causes include:
The instability caused by the war in Ukraine, which has reduced the availability of gas. This has forced countries that were previously reliant on Russian gas to find alternative sources. This puts countries like Germany in direct competition with the UK for gas from places like Norway. This increase in demand has pushed wholesale energy prices to record-breaking highs.
Other factors affecting competition in international gas markets – for example, droughts in China have affected hydropower generation, and have led to higher demand for gas.
The UK is experiencing low gas reserves due to infrastructure changes and greater demand. This means we have to buy gas at a higher price to ensure we can get safely through winter.
A significant proportion of UK electricity is generated by gas power plants, so changes to wholesale gas costs also affect electricity production and costs.
High carbon-offsetting costs for fossil fuel generation.
Adverse weather impacting the output of wind and hydro power production.
The good news is that a mild winter resulted in lower than expected consumption, which helped the UK increase its gas reserves. This resulted in a notable decrease in the cost of wholesale gas and electricity. Some of this change has been seen in July and October's reduced price caps. Wholesale prices still remain much higher than before the pandemic and it’s still too early to forecast long term impact on prices.
The simple answer is yes. UW isn’t at risk of going bust. How can we be so sure?
Firstly, the structure of our wholesale energy agreement means that the cost of the energy we buy is protected against pricing volatility, both today and in the future.
Secondly, we’re more than just an energy provider. We have a unique, multiservice offer that also spans broadband, mobile and insurance. This generates a number of different revenue streams and means we’re not solely reliant on energy.
And finally, we’ve always taken a long-term approach to pricing while still offering competitive tariffs to all our customers. We’ve spent the last 25 years building a stable and sustainable business, and we plan to be around for many years to come.
We recognise that some UK families are facing a serious challenge. But we at UW offer our customers a few different ways to make savings. Find out more here.
The legal bit
Cheapest energy when you take Energy and one other Eligible service vs standard variable tariffs. Based on Ofgem’s typical domestic usage. Payment by direct debit. Eligible services means broadband, mobile, insurance (insurance means Boiler & Home Cover, Income Protector and Home Insurance only). For sale nationally, excl. existing customer tariffs and intro offers. Correct: 23/02/23. Contact us to verify.