Energy price cap: What is it, how does it work, and what does it mean for me? | Personal Finance | Finance

Currently, and up until September 30, a customer with “typical” energy usage paying by direct debit is being charged a maximum of 28p per kWh for electricity and 7p per kWh for gas. From October 1, these will rise to 52p and 15p respectively.

Electricity and gas daily standing charges are currently capped at 45p and 27p respectively, but these will see a more modest increase to 46p and 28p. However, according to Ofgem, rates “are averages and will vary by region, payment method and meter type”.

Why is the energy price cap rising?

Ofgem said the increases reflect the continued rise in global wholesale gas prices, which began to surge as the world resurfaced from the Covid pandemic, and has been driven higher to record levels by Russia slowly switching off gas supplies to Europe.

Jonathan Brearley, CEO of Ofgem, said: “The price of energy has reached record levels driven by an aggressive economic act by the Russian state.