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Energy Price Guarantee need-to-knows
Everything you need to know about the Government's energy discount
Archived 1 July 2023
The Energy Price Guarantee (EPG) was introduced on 1 October 2022 to protect households from rocketing prices. However, on 1 July the Price Cap fell below the EPG, meaning for most the EPG no longer applies, as we pay the lower of the two. We take you through what the Energy Price Guarantee (EPG) is and what it means for your bills.
The Price Cap has dropped below the EPG meaning energy rates are once again controlled by the Price Cap
The Price Cap has dropped below the Energy Price Guarantee (EPG) and so the EPG has fallen away and no longer controls most households' energy bills. You can check how much you'll pay with our Energy Price Cap calculator and we've got more info in our What is the Price Cap? guide.
Martin Lewis: What the Energy Price Cap drop means for you and the EPG
When the new Price Cap from 1 July was announced, Martin explained what it means for your bills and the future of the EPG.
Martin Lewis: What the Energy Price Cap change means for you
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Energy Price Guarantee: 10 need-to-knows
Up until 30 June, the EPG controlled what most of us were paying for our gas and electricity. This all changed on 1 July, when the the Price Cap fell below the EPG, meaning the EPG will became irrelevant to most people's bills. Here's what you need to know.
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From 1 July, the EPG ended for most, as the Price Cap fell below it
Regulator Ofgem sets the Energy Price Cap every three months (setting a limit on what providers can charge per unit on their standard tariffs), but between October 2022 and June 2023 no one paid the full amount under the cap, due to the EPG discount.
From July, this all changed, as the Cap is now below the level of the EPG, meaning that for most, the EPG will has fallen away and the Price Cap once again controls most people's rates – as we pay the lower of the two.
While falling prices is welcome news, the loss of the Government's £400 energy bill support scheme means most are still paying more than they did last winter.
Energy Price Cap and Energy Price Guarantee changes
Price Cap dates
Typical dual-fuel household direct debit bill under the Price Cap Typical dual-fuel household direct debit bill under the Energy Price Guarantee 1 October 2022 to 31 December 2022
£3,549/year
£2,500/year 1 January 2023 to 31 March 2023
£4,279/year
£2,500/year THE PREVIOUS RATE
1 April 2023 to 30 June 2023
£3,280/year
£2,500/year THE CURRENT RATE
1 July 2023 to 30 September 2023
£2,074/year
£3,000/year 1 October 2023 to 31 December 2023
Weak prediction (1)£1,933/year
£3,000/year 1 January 2024 to 31 March 2024
Weak prediction (1)
£1,944/year £3,000/year (1) According to the latest prediction (on 13 June) from analysts at Cornwall Insight. (2) The prepay Price Cap is about 2% higher until 1 July, and for those who pay each month after getting a bill, 6% higher. That differential will likely continue for those who pay on receipt of a bill. Those on prepay will pay less from July.
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The Energy Price Guarantee is a Government subsidy that brought bills down to £2,500 a year last winter for a typical household
On 1 October 2022, the Government introduced the Energy Price Guarantee (EPG) to reduce bills in England, Scotland and Wales amid soaring wholesale energy prices.
It came after Martin and MSE had spent months raising the alarm over the energy bills catastrophe we could see coming that would have taken a typical bill to over £4,000. Martin's plea was for urgent intervention, so he welcomed the Energy Price Guarantee announcement.
We've seen a lot of confusion, so let's start by saying there's NO MAXIMUM ENERGY BILL. The EPG (and Energy Price Cap) limits the amount households can be charged per unit of gas or electricity, as well as a cap on the daily standing charge (see rates below).
It provided a set discount on Ofgem's Price Cap, and up until 30 June, it brought bills down to £2,500/year for a typical household paying by direct debit – but if you USE MORE, YOU PAY MORE; USE LESS, YOU PAY LESS.
It's more expensive if you prepay, or pay on receipt of bills
The £2,500 a year annual bill is based on a typical household paying by direct debit. For those who pay on receipt of bills, or use a prepayment meter, the cap is slightly different.
Annual bill for a typical household
Payment method Energy Price Guarantee
from 1 April to 30 June 2023
Direct debit £2,500 Standard credit (on receipt of bill) £2,702 Prepayment £2,545 Based on Ofgem typical consumption values of 2,900kWh of electricity and 12,000kWh of gas each year.
The fact payment in receipt of bills is higher is why those thinking of "ditching direct debit to just pay what I owe" should be careful. If that's you, check out Variable direct debits.
And it's worth noting, that from 1 July, prepay customers will be pay no more than those who pay by direct debit.
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The EPG was due to rise 20% in April – but this was postponed after our campaign
On 1 April 2023, the EPG was set to rise by 20% on average, taking a typical bill under the EPG from £2,500/year to £3,000/year. But Chancellor Jeremy Hunt postponed the rise until July after 131 charities supported Martin and MSE's campaign.
Instead, the EPG rose to £3,000/year in July – however, this increase won't have any impact on the majority of households' bills. That's because the Energy Price Cap will fall below the EPG, and households pay whichever is the lower of these two rates (more below).
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It is actually a cap on standing charges and unit rates
There is no actual total cap on bills - instead there are regional caps on the maximum standing charge and the unit rate firms can levy. Here are the average unit rates for dual-fuel customers under the current Energy Price Guarantee until 30 June, and the Energy Price Cap from 1 July until 30 September.
For full regional rates under the current Price Cap and previous EPG rate (including for prepay and on receipt of a bill) see our Energy Price Cap unit rates guide.
Average standing charges and unit rates for gas and electricity if paying by direct debit
New Energy Price Cap
rates from 1 July to 30 September 2023
Current Energy Price Guarantee
rates from 1 April to 30 June 2023
Gas Unit rate: 7.51p per kilowatt hour (kWh)
Standing charge: 29.11p per day
Unit rate: 10.31p per kilowatt hour (kWh)
Standing charge: 29.11p per day
Electricity Unit rate: 30.11p per kWh
Standing charge: 52.97p per day
Unit rate: 33.21p per kWh
Standing charge: 52.97p per day
Rates and standing charges are averages, which vary by region. Assumes payment by direct debit and includes VAT (at 5%). For those who pay each month after getting a bill, it's typically 6 to 8% higher.
On Eco 7, Eco 10 or other non-standard tariff? Firms should apply the discount equally across the day and night rates (around 16.6p/kWh for electric from April). We've got more info in our Is Economy 7 worth it? guide.
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Prepay for energy? You'll still get a small discount on gas unit rates under the EPG from July
In March, the Government said it would end the "prepayment penalty" from July, where those on prepay meters pay more for their energy than those paying by direct debit under the Price Cap and EPG.
The Government confirmed it would do this through the EPG – by providing an additional discount on the Price Cap rates for those on prepay, to bring down the rates, so you'd pay no more than those paying by direct debit.
So while the EPG has ended for most households, due to the Price Cap falling below the EPG rate set by Government, those on prepay are still getting a state-subsidised discount to end the prepay premium.
Under the Price Cap, someone on typical use pays £2,077 a year from July – £3 more a year than someone paying by direct debit. To end the prepayment penalty, the Government will provide a discount of about 0.3p/kWh on the gas unit rates under the Price Cap. This brings a typical prepayment bill to £2,046 a year.
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Are you on a FIXED deal? The EPG reduced what you paid until the end of June
If you fixed in the last year or so, when prices were very high, your bill will have been subsidised to the EPG level until 30 June, provided your deal is more expensive than that rate.
On 1 July, the Price Cap fell below the EPG, so the subsidy is now set at zero, meaning the reduction on gas and electricity rates on fixed deals has ended and your fix will go back to its original price.
So if you've fixed recently, it may be worth considering switching to a price-capped standard tariff – possibly even if you need to pay exit fees.
You can either ask your existing supplier to move you on to its standard tariff – most will let you do this without paying exit fees – or you can switch supplier, as most are accepting switches to their standard tariffs again, though you will need to pay exit fees unless you're in the last 49 days of your deal.
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You currently pay £300/year even if you use no energy
You pay for having access to energy even if you don't use it through what's known as the daily standing charge. If you've both gas and electricity, the average direct debit standing charge is £300/year before you use owt.
It's worth noting there are variances in standing charges by region (for example, if paying by direct debit in London it's £246/year, in North Wales and Mersey it's £332/year) – Ofgem says it is due to the different costs to transport power to where you live.
From July, we'll be paying the lower Price Cap rates, and this high daily standing charge will remain unchanged – this is something Martin has challenged Ofgem on.
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There was a similar guarantee in Northern Ireland – but that ended in June
The Northern Ireland Energy Price Guarantee offers households the same level of gas and electricity bill support as those in England, Scotland and Wales.
Suppliers automatically reduced bills for households in Northern Ireland by up to 3.8p/kWh (previously 13.6p/kWh) for electricity and 2.6p/kWh (previously 3.8p/kWh) for gas, meaning a typical household was paying £2,100/year for their energy until the end of June.
But from 1 July, as the Price Cap for England, Scotland and Wales has fallen below the EPG, the EPG subsidy is now set at zero – including for Northern Ireland. That means you'll likely see a small increase in bills.
For more, see our Northern Ireland Energy guide.
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There's lots of help available if you're struggling to pay your bills
If you're struggling, there's plenty of help out there, including Government grants and support from your provider. Our full What to do if you're struggling to pay energy bills guide includes all the energy help available.
If you pay by direct debit, you should also check you're paying the right amount for your bills. You can use our 'Direct debit too high?' calculator to get a good idea.
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There are lots of ways to easily reduce what you use
Try our interactive energy saving tool, where you can click around a virtual house to find out how much things cost to run and how to cut back. Also, see more Energy saving tips, the Energy mythbusters guide for less clear-cut issues, and our Heat the human guide.
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