A complete breakdown of the energy price cap

Date icon 04/04/2023 Read time icon 8 minutes read

The energy price cap was introduced by Ofgem in January 2019 to set a maximum price that energy suppliers can charge for each kilowatt hour (kWh) of energy used by consumers. The price cap ensured that consumers on default energy tariffs were given fair and cost-reflective prices following concerns they were being overcharged for their energy.

Founded in November 2000, Ofgem (Office of Gas and Electricity Markets) is Great Britain’s independent energy regulator, working with government, industry, and consumer groups to deliver a net-zero economy at a fair price.

What the April 2023 price cap means for businesses

Currently, there are no existing price caps on business energy. However, businesses may have benefitted from the Energy Bill Relief Scheme which launched on 1^st October 2022, to give business owners financial support with their energy bills for six months.

The Energy Bill Relief Scheme was replaced by the Energy Bills Discount Scheme on 1^st April 2023. Here's how the discount scheme works and what it means for your business.

What is the Energy Bills Discount Scheme?

The Energy Bills Discount Scheme (EBDS) is the latest business energy support programme to help businesses manage the rising energy prices by discounting their gas and electricity unit rates (kWh).

How does the Energy Bills Discount Scheme work?

EBDS offers businesses a discount on the wholesale portion of their unit rates, should their rates be higher than the minimum threshold (10.7p per kWh of gas and 30.2p per kWh of electricity).

How it affects most business energy consumers:

Gas – A maximum of £0.00697 (about 0.7p per kWh) off the difference between the wholesale portion of the unit rate you pay and the price threshold.
Electricity - A maximum of £0.01961 (about 2.0p per kWh) off the difference between the wholesale portion of the unit rate you pay and the price threshold.

Businesses eligible for EBDS will be able to save money on energy bills to help their finances during the current cost of living crisis with government funding for the scheme thought to be £5.5 billion between 1^st April, 2023, and 31^st March , 2024.

What the April 2023 price cap means for consumers

In February, Ofgem announced a new price cap level from 1^st April to 30^th June 2023 of £3,280. This is what consumers would pay if the Energy Price Guarantee (EPG) were not in place. However, in the recent budget, the government announced that the EPG will remain at £2,500 until June 2023 meaning that the expected April energy bill rise for the average UK household has been delayed.

Why electricity tariffs are still important for EV drivers

Electricity suppliers commonly provide electric vehicle (EV) tariffs specifically designed to be an affordable way for EV owners to charge at home.

As of March 31^st 2023, households on a two-rate tariff will still be able to leverage lower, off-peak rates to cut their charging costs further with cheaper overnight charging of their vehicles. However, it is important to note that the peak, higher daytime rates are likely to be above the price cap.

Are you eligible for Workplace Charging Scheme grants?

The Office for Zero Emission Vehicles (OZEV) introduced grant schemes for the installation of electric vehicle charging infrastructure in 2016 to support the increased popularity and wider use of electric vehicles. OZEV offers a Workplace Charging Scheme voucher-based service to lower the installation cost (up to 75%) of EV infrastructure in staff and fleet parking areas.

Here is Everything You Need To Know about EV Grants 2023.

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