Details the changes to the maximum amount energy suppliers can charge for each unit of energy and how they affect you.
Every three months we review and set a level on how much an energy supplier can charge for each unit of energy.
From 1 October 2023 the price for energy a typical household who use gas and electricity and pay by Direct Debit will go down to £1,923 per year.
The level of the energy price cap is based on typical household energy use. You can read about typical household energy use and how the price cap is calculated on our Average gas and electricity use explained page.
Costs included in the energy price cap
The level of the energy price cap is made up of different costs, for example the wholesale cost of gas and electricity, costs to supply energy on the network and VAT.
As part of the energy price cap, energy suppliers are given an allowance for how much they can earn in profit before interest and taxes over and above the costs to supply energy.
From 1 October 2023 this allowance will increase an average of £10 per customer per year.
Reasonable profits are important for the energy sector. It helps suppliers use this money to put towards things like improving customer service and customer care.
It also means that energy suppliers can use income they’ve earned before tax to cover costs if energy prices go up again and reduce the risk of them going out of business. The allowance of reasonable profits will improve energy suppliers' financial stability and protect consumers in the future.
You can also read the background about the price cap policy.
Support for people with a prepayment meter
From 1 October 2023 our policy changes are reducing the costs for people who pay for their energy using a prepayment meter by £42 per year. We are also introducing an initial 12-month allowance to cover increased debt costs associated with additional support credit. Additional support credit is often issued to people at risk of being cut off from their energy supply because they cannot afford to top up their meter.
Despite these changes the price cap level for a prepayment meter will still be higher than that for Direct Debit but this difference will be covered by government support through the Energy Price Guarantee until the end of March 2024. We are seeking views on ways to balance standing charges when that support ends, so that those who pay for their energy using a prepayment meter or Direct Debit pay the same standing charges. We aim to introduce this change by April 2024. You can feedback your views in our standing charges levelisation consultation.