Can anyone explain how the energy cap works?

[LuluBlakey1]

We have gas and electricity accounts with British Gas.

How do they apply the £400 payment from the government - do they take £200 off each account? Or ask us or what?

How do they apply the £2500 cap? Against one account, divided equally across both?

Our estimates from them do not add up to £2500 (although they might given the costs from 1 Oct but our new bills that arrived today don't state that amount as estimates)

We currently pay £60 a month electricity Direct Debit and £175.00 a month Gas Direct Debit which way more that covers the amounts we use. I don't object to the Gas as we will use much more over winter. However they have just increased our electricity Direct Debit from £60 a month to £145.00 a month and at the same time are telling us our annual useage estimate cost is £617.00 a year (they have not included the £400 government payment in either bill) That direct debit is £145x12 = £1740 a year. We are not in debt to them. Can I insist the electricity Direct Debit is reduced to £80.00 per month (given the £400 payment from the government is also to be taken into account?)

The £400 payment goes against electric only. Different providers are doing things differently, most seem to be doing £67 off each bill between Oct and Mar. Some are refunding it instead.

You can normally reduce your monthly payment yes.

The cap is on the daily standing charge for gas and electric, and on the kW price. It will be an increase on pre October prices but not as much as they first thought. You'd need to know your monthly/annual usage to see the cost for you.

Bulb have already credited my electricity account with the first payment £66

The cap is not £2500.

The cap is on the price per unit for gas and electricity, and standing charge. The more you use the more you pay.

£2500 was a figure plucked out of the air of what it would probably cost the average household. If you use more than average you will pay more than £2500.

Look on your statements/smart meter and work out how much you used last year in KWH. Times that by the price cap for KWH. Add in 365 for the standing charge. Divide that by 12. That's how much you should be paying a month.

Sorry should say add in 365 x the standing charge rate.

There isn't a £2,500 cap. That is an estimate of what an ordinary household MIGHT pay. It doesn't mean you.

The price cap is the maximum amount they can charge per unit of electricity or gas. Say they charge 30p a unit, you can still end up with a £3,000 bill, but you would need to use 10,000 units.

So you still need to be careful how much you use.

I think you get £66.67 off your total bill (gas & electric) each month between October and March. 6 x 66.67 = £400.

British gas are taking direct debits as normal but then refunding the £66 to people's bank accounts

I'm with sse and once my direct debit hits their account they are returning £60 for the next 6 months. There's no £2500 limit if you use more than the average household you'll pay more than £2500.

As others have said . The cap isn’t a limit it’s the price per unit and the quoted £2500 is an example total for an average household; whatever that is! If you are on variable rate and not fixed the your bill won’t be the same as it’s gone up this month

Also different companies are using that government money differently some applying to bills others like OVO are refunding in our bank monthly.

I had an email a while back
They are basically sending people these amounts to their bank account.

My email is dated 15th August

Some companies are doing that (British Gas is) but some are crediting peoples electricity account.

@LuluBlakey1 Does that all make sense now? If not, keep asking questions!!

The BBC have made some nice clear videos on this. After The Prime Minister went round saying things that weren't true.

When are the £400 energy rebate and other cost-of-living payments due? www.bbc.co.uk/news/business-61592496

As you pay your electricity bill by DD then British Gas will take the DD and then refund you the £66 or £67 each month for the next 6 months. If your DD stats at £60 then you’ll get that refunded and the balance as a credit on the account.

The price cap means that electricity prices are capped at £0.34 per kWh and standing charge at £0.46 per day, and for gas prices are capped at £0.10 per kWh and standing charge at £0.28 per day.

From your bills you should be able to calculate your annual usage for both fuels in kWh to calculate your annual cost at the capped rate.

I really hope people realise there isn't a £2500 cap before firing up their heating to be on all winter!

I'm actually genuinely surprised by the amount of people who believe a fixed tariff is like an all you can eat buffet for gas and electricity.

You need to ask your electricity supplier how they are handling the £400 rebate.

There is no such thing as the £2500 energy cap.

The cap is on the maximum amount energy suppliers can charge for the standing charge and per kWh of electricity and gas. The £2500 is just an illustration of how much the average household will pay for energy at those prices. The actual amount you pay still depends on how much energy you use.

The caps are:

Gas
Standing charge: 28p per day
kWh price: 10.3p

Electricity
Standing charge: 46p per day
kWh price: 34p

It is an increase of 27%.

@Raidtheice I pity the people who get their bills quarterly! In for a massive shock.

@userxx I get my bill quarterly, why am I in for a massive shock?

Ignore the £2,500 figure as others have said. It's largely meaningless. The price cap is a cap on unit price, not on overall cost. £600 a year for electricity at the new rates would be quite low usage - not impossible but well under average. Do you have a recent bill that has your annual usage in Kwh?

It is impossible to underestimate public illiteracy and innumeracy.
(or the peculiar pride people take in it)

I think initially they reported it as if no one would pay more than £2500. They seem to be a bit better now but that figure should never have been thrown about as it's confused lots of people!

The more you use the more you pay!

Or maybe the fact that the prime minister said no family would pay more than £2500. It's her policy and those are her words on it.

Thank you. I now understand that bit- that's helpful.

The bit I don't understand still is the £2500 annual average bill and how that works. Our bills may not come to that in total but putting that aside, I don't really understand what this is at all. What has the government actually done ? Does it affect our gas and electricity or just one of those? Which has been reduced most in price? I just don't get it.

Blame Truss - she’s been telling porky pies about the price cap.

amp.theguardian.com/business/2022/sep/30/liz-truss-right-energy-bill-2500-households