Ofgem explains that the energy price cap limits the amount energy companies can charge customers who are on default tariffs, including standard variable rate (SVR) ones. The cap limit has been hiked up since 1st April 2019.
The energy price cap, which came into effect on 1 January 2019, puts a ceiling on the unit (kWh) price of energy, and on the standing charge. However, it doesn’t cap your total energy bill, it just puts a price limit on each unit of energy you use, and on your standing charges. The more energy a household uses, the higher its bill will be.
Many energy providers have introduced price increases for their default and (SVR) tariffs in response to the increase in the cap level. These higher energy costs will be seen in bills sent out from now on.
This serves as a timely reminder to compare energy prices and see if you can find a better tariff.
Default and SVR tariffs are usually more expensive than the main alternative – fixed rate tariffs. Fixed tariffs last for a set amount of time, usually 12 or 24 months, with the price per unit of energy fixed for the duration of the deal. You’re not affected by the cap if you’re on a fixed tariff.