Price cap methodology

End Fuel Poverty Coalition Next Ofgem Price Cap Estimates Calculations

FIGURES LAST UPDATED: 1 October 2021.

 Take the % of a dual fuel tariff which is governed by wholesale costs (currently 34.63%, with 65.37 not affected by wholesale prices): https://www.ofgem.gov.uk/energy-advice-households/costs-your-energy-bill

Take wholesale energy prices from https://marketwatch.zenergi.co.uk/prices/

Date Gas Year Ahead Power Year Ahead Total
20/9/21 134 148 282
20/8/21 88 92 180
20/7/21 75 79 154

Calculate the % increase between two dates https://percentagecalculator.net/, i.e. July to Sept 21 is an 83.12% increase. 

On a bill of GBP100, 34.63 is going to increase by 83.12% (i.e. 34.63*1.8312 = 63.41).

Therefore a bill which was GBP100 is now 63.41 + 65.37 = 128.74.

Meaning that there is a 28.74% increase in the likely fuel bill due to the increase in wholesale prices. This does not account for any increases in the cost of other elements of the energy bill.

According to the Select Committee on Energy Efficiency and Fuel Poverty (HC37 2009) and Fuel Poverty Methodology handbook (BEIS / BRE updated September 2016) for every 1% rise in energy prices an additional 40,000 homes go into fuel poverty. This is the latest data available.

There are at least 3.66m households already in fuel poverty (15.38% of the 23,800,000 English households).

The price increase which comes in on 1 October (12%, see below), will result in an additional 488,000 households in fuel poverty, taking the total to 4,148,000 homes in fuel poverty (17.4% of all households).

Using EFPC methodology, we estimate the next Ofgem price cap (due to be announced 7 Feb 2022, for implementation on 1 April 2022) will see a  28.74% increase, that would mean an extra 1,149,600 households entering fuel poverty.

This means that 5,297,600 or 22.26% of English households will be in fuel poverty from 1 April 2022 unless mitigating measures are taken.

Previous Ofgem price cap levels:

Cap announcement date Increase GBP New rate after change applied GBP % increase
Pre-cap 1067
07-Aug-17 -19 1048 -1.78
07-Feb-18 41 1089 3.91
07-Aug-18 47 1136 4.31
07-Feb-19 117 1254 10.39
07-Aug-19 -75 1179 -5.98
07-Feb-20 -17 1162 -1.44
07-Aug-20 -120 1042 -10.33
07-Feb-21 96 1138 9.21
07-Aug-21 139 1277 12.21
07-Feb-22 367 1644 28.74
By announcement date, source: Ofgem Press Releases. 7 Feb 22 data estimated by EFPC.