What is the Energy Price Guarantee?
The Energy Price Guarantee (EPG) is a temporary measure from the government that limits the amount you can be charged per unit of gas or electricity used.
The government pays energy suppliers directly for any extra gas and electricity your household uses above the Energy Price Guarantee limit where you live.
Before this was put in place, there was already a measure to limit the amount energy companies can charge, called the Energy Price Cap. This was launched in 2019 and it is set every three months by energy regulator Ofgem.
From October 2022 until June 2023, the EPG temporarily replaced the Energy Price Cap, because the cap was so high. The EPG limited the annual energy bill for a typical household using gas and electricity (paying by direct debit) in England, Scotland and Wales, to £2,500. But from July 2023, the EPG went back up to £3,000. It will stay in place until April 2024.
Now, the current Energy Price Cap, which covers the period from July to September 2023, is the lower of the two, and reduces the maximum energy bill for a typical household in England, Scotland and Wales to £2,074 a year.
Is the Energy Price Guarantee the maximum amount you’ll pay for energy bills?
When the EPG is lower than the Energy Price Cap, how much you pay will be determined by where you live, how much energy you use and how you pay your bill.
You might pay less, but you could also pay more than the cap of £3,000 a year, because it refers to a ‘typical’ household with ‘average’ energy use. So, it’s a ballpark figure in essence.
Also, the EPG applies if you’re on a standard variable tariff. If you have a set tariff with your energy supplier, it is only relevant if your tariff is higher than their standard variable tariff.
There’s still a standing charge payable by gas and electricity users on default tariffs, that remains capped at the level set by Ofgem. This works out at just under £300 a year on average if you use gas and electricity and pay by direct debit. The current rates are set at 53p a day for electricity and 29p a day for gas.
If you have a prepayment meter, you’ll pay around £80 a year more than people on direct debit, while those who pay after receiving a bill are charged around 6% more. You can find out more about how the EPG is applied to different tariffs and payments here.
How does the Energy Price Guarantee vary between parts of the UK?
The EPG varies from region to region within the UK, according to rates set by Ofgem.
Transport costs to deliver gas and electricity are considered. For example, people who live in North Wales are currently paying more than those living in London. The lowest cost levels are in Northern England and East Midlands.
You can find out how your regional rate compares here.