Energy price cap 2022: What is it, will the new rate be announced today by Ofgem, why are energy prices increasing and how much could bills rise to in the UK?

Many have switched to variable energy tariffs rather than fixed in a bid to save money but prices are set to rise again as the energy price cap is due a review.

Every six months, energy regulator Ofgem sets the energy price cap and the new rate is set to be announced today.

Here is everything you need to know:

What is the energy price cap?

The energy price cap is the maximum amount a utility company can charge customers in the UK per year for their electricity and gas bills.

Ofgem set the cap to limit the amount a supplier can charge customers per unit of gas and electricity.

The unit measurement is a kilo-watt per hour.

The cap only applies to customers who are on a standard variable tariff (SVT), which is usually an energy provider's most expensive tariff.

When will the energy price cap change?

The cap will be unveiled today (February 3), with any changes set to be introduced on April 1.

How much could the cap rise to?

The most recent cap was set at £1,277 on August 6, 2021.

This was a rise of 12 per cent or £139 from the review six months prior.

Energy bills could soar another 50 per cent from April 1 as many industry experts have urged the government to intervene on the cap.

Energy UK chief executive, Emma Pinchbeck, warned that 'domestic energy prices are going to go up by 45 per cent to 50 per cent in the spring.'

Emma told BBC Radio 4 on Monday, January 17 that the UK government needs to intervene like others have across Europe.

She added: ‘A significant proportion of the bill is policy costs. Many other governments across Europe have reduced taxes or VAT on bills.

‘In the UK that would save around £90 per customer.’

Why is the cap being increased?

The price of gas on the wholesale market has been increasing over the last year, rising by 250 per cent since January 2021.

This has caused many energy providers to go bust but now the remaining companies are passing on the cost to customers.

Wholesale prices are increasing due to a number of factors which include a cold winter in Europe that has put pressure on supplies, meaning that stored gas levels are much lower than normal.

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Hot weather in Asia also saw more gas used for air conditioning, while exports have been lower in north-west Europe.

All of these factors have helped to increase gas prices in the UK, Europe and Asia.

Can we expect a council tax rebate?

Chancellor Rishi Sunak is expected to give a council tax rebate announcement later today.

The chancellor will make a statement in the House of Commons at 11.30am and a press conference will be held at 5pm to provide further details.

The treasury is expected to announce a rebate of £150 for those in council tax bands A to D as a measure of support for those on the lowest incomes.

The move is expected to cost the Exchequer £9bn.

You can find out your council tax band here.

A message from the Editor, Mark Waldron

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