What are the energy price guarantee unit rates?

4 min read
October 20, 2022
energy costs winter

It’s the topic at the front of everyone’s minds – How are we going to afford the winter with price hikes by energy suppliers driving some homes into a financial crisis?

Will the Government’s energy price guarantee unit rates and standing charges really save households from spiralling into unaffordable debt?

The reality is that every household will need to make adjustments this winter to ensure their energy bills aren’t through the roof. It is most crucial that we are all aware of how costs have changed, and what we can expect to be paying monthly, yearly and daily. This will allow us to plan ahead and make those crucial adjustments, ensuring that some homes aren’t having to choose between eating properly and staying warm this winter.

What’s the latest energy news?

As of the 1st October, the Government’s energy price guarantee came into effect in England, Scotland and Wales. The cap is significantly lower than Ofgem’s originally planned October price hike of 80%, averaging around 27%. This is on top of the already 54% increase we experienced in April 2022.

This price cap was originally to be in place for 2 years, taking us through to the winter of 2024, but with the new Chancellor, Jeremy Hunt’s changes, it seems that this is now only happening until April 2023. And as you may have heard, the ‘average’ yearly cost being quoted per ‘average household’ is £2,500.

How does this affect you?

Many have misinterpreted the information as a price cap on the total that can be charged to a household for their energy use during this period but this isn’t right.

The energy price guarantee ‘cap’ is only applied to the daily standing charges and the individual unit price an energy company can charge a consumer

So, if you use more energy units than the ‘average household’ as calculated by the Government, you will pay more than £2,500. For example, if the above calculation was based on using 8 electrical units per day and 35 gas units per day, but you use 10 and 40 per day, your yearly bill will be more than £2,500. On the contrary, if you use less than the Government’s calculated average unit usage, your yearly bill will be less than £2,500.

Rates if you pay your energy via direct debit

Here are the average Government’s energy price guarantee unit rates and standing charges for those paying direct debit (which is over 50% of consumers):

Gas:                                                               Electricity:

Unit Rate = 10.33p per kWh.                        Unit Rate = 34.04p per kWh

Standing Charge = 28.49p per Day.            Standing Charge = 46.36p per Day.

* Please note this is the country’s average rates for energy units and standing charges under the Government’s energy price guarantee. These rates do vary depending on your location in the country. To see your area’s specific energy price guarantee unit rates and standing charges, please see the Government website, where there is a full breakdown of rates per region.*

Looking at the UK national averages for energy usage of gas and electricity, the expected yearly bills for those paying by direct debit will more likely be between £2,449 and £2,948.

Rates if you don’t pay by direct debit

There are also varying energy price guarantee unit rates and standing charges for those who are not paying by direct debit each month.

Government’s energy price guarantee unit rates and standing charges for those paying by Prepayment:

Gas:                                                                Electricity:

Unit Rate = 10.63p per kWh.                          Unit Rate = 33.08p per kWh

Standing Charge = 37.51p per Day.              Standing Charge = 51.41p per Day.

Government’s energy price guarantee unit rates and standing charges for those paying when they receive their bill:

Gas:                                                                Electricity:

Unit Rate = 11.12p per kWh.                          Unit Rate = 36.80p per kWh

Standing Charge = 33.54p per Day.              Standing Charge = 52.40p per Day.

So, it could be argued that one way to save money on your energy bills, which is on average a £200 a year saving, is switching to monthly direct debit.

However, be aware that direct debits are based on your supplier estimating your energy use, and you could find yourself overpaying each month if they overestimate. This is easily fixed by talking to your supplier, providing regular meter readings, and remember, you can always request your money back!

Worried about the price increase and what you can do?

We understand that as much as the new Government price guarantee increase is less than Ofgem’s original price hike, it is still an increase that is going to cause many households to have to rethink their energy use and finances.

This could include switching suppliers if you don’t feel you’re on the best possible deal – if this is the case, speak to us at Resolver Money Savers where we can help you compare and find the best energy prices.

The Government has put in place the Energy Bills Support Scheme, which is providing every eligible household with a non-repayable £400 discount to help reduce their energy bills. See the Government website to check if you’re eligible and how you will receive the discount.

We’ve also written a Resolver guide on ‘what you can do at home to save energy and money!’. It’s full of ideas and handy tips from small daily changes to home improvements that help reduce your energy usage and therefore your energy bills.

If you have been struggling to pay your energy bills, or you know that the new price increase will overstretch you financially, we have a step-by-step guide on ‘how to tackle large bills,’ including speaking to Ofgem and us here at Resolver if you are struggling to communicate with your energy supplier.

Remember, the Government energy price guarantee is for unit rates and standing charges, not your total yearly bill. Find your energy unit prices, make the changes you can to reduce your energy usage and bills, and if you need any help or support when communicating with an energy supplier that is not communicating well with you, speak to us at Resolver.

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