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Glasgow Live
Glasgow Live
National
Andrew Quinn & Sophie Buchan

Ofgem energy price cap in Scotland explained - everything you need to know

It has been announced by Ofgem that there will be a drop to its energy price cap from the current £3,280 per year to £2,074 for the average household - including those in Scotland.

The change will come into force from July 1 of this year due to falling wholesale energy prices.

The lower cap will replace the Government’s Energy Price Guarantee (EPG), which currently limits the typical household energy bill to around £2,500, meaning the typical annual bill will fall by around £426.

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This is still double what it was in 2021 and despite the good news, households across Scotland, England and Wales may not feel the benefit with many of the discount schemes having ended.

So what is changing in the price cap? Here's what you should know.

What is the Ofgem energy price cap?

The energy price cap was introduced by the government back in January 2019 and sets a maximum price energy suppliers can charge consumers in Scotland as well as England and Wales for each kilowatt hour (kWh) of energy used by the suppliers.

The cap is a government protection, calculated by Ofgem and how much you pay depends on how much energy you use.

It has been put in place to ensure what customers on default energy tariffs pay reflect the cost paid by suppliers for wholesale energy, and that the profit firms make is capped. hence the name.

Ofgem themselves explain: "We regulate energy suppliers, but we do not regulate the oil and gas production sector. The cap ensures that the profit energy suppliers make is capped."

Will Scots have cheaper energy bills?

According to the Daily Record, Citizens Advice Scotland has warned the drop only means consumers are paying similar amounts to what they were in winter, when the £400 Energy Bills Support Scheme was in place.

And they are expected to rise again in January.

Citizens Advice Scotland social justice spokesperson David Hilferty said: “This fall in the price cap does not necessarily mean cheaper bills for people, given the end of the Energy Support Scheme.

"The cap remains higher than it was last summer, bills will remain higher than the beginning of this crisis in 2021, and since then people have faced a huge squeeze on their finances."

He continued: “Citizens Advice Scotland would propose three things policymakers could do to support people – increase the value of social security, a social tariff in the energy market for those on low incomes, and better funding for advice services like CABs that help people with energy and financial problems. CABs deliver real results for people, with the average financial gain for those who saw one after seeking advice last year being £4,200.”

SNP Energy spokesperson Alan Brown added: "Scottish families are paying the price for Westminster failure, with the typical household energy bill double what it was in 2021 and wages falling behind soaring inflation - showing exactly why Scotland needs to escape Westminster control as an independent country.

"Scotland is an energy-rich country and it's absurd the UK government is forcing families to pay through the nose for a resource we have in abundance, while it refuses to reinvest the huge profits it is raking in from Scotland's north sea oil and gas.

"Westminster should be using these profits to give families in Scotland an energy bill rebate - and it should match the ambition of progressive SNP government policies, like the £25 a week Scottish Child Payment, to help families struggling with the cost of living."

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