Update to the Default Tariff Cap

The new levels of the default tariff cap have been announced by Ofgem.

Leccy: was £882.08, will be £840.28

Gas: was £878.79, will be £797.36

The breakdown’s components have altered; in case there was anyone left who was still following, there probably isn’t now.

Source: from tab 1c Consumption adjusted levels on “Final levelized cap rates model (Annex 9) 1 July to 30 September 2025_0.xlsx” from this page.

So, OC (operating costs) have gone, PAAC and PAP have gone (Payment method Adjustment Additional Charge and Payment method Additional Percentage); the smart meter net cost charge (SMNCC) has shrunk markedly, AA (adjustment allowance) has gone; new in the charts are IC, CO and DRC. “Industry charges”, “Core operating costs”, and “Debt-related costs.”

To this we must add VAT at 5%, which gets us:

Old tariff cap: £1849

New tariff cap: £1720

Miliband’s original, and I have decided, impossible (under his own terms) promise was to reduce bills by £300. That, I said, was off the July-September 2024 tariff cap of £1568. The bill, in other words, needed to go down to £1268 to fulfil the promise. The present £1720 means that an additional £452 savings are necessary to achieve it.

Finally, I may note that at the previous tariff cap, you could not slide a plastic £5 note between the “typical” household’s gas and electricity bills (£923 and £926 inc. VAT, respectively). However, we now can slip said fiver between, and much more.

	Apr-Jun ’25	Jul-Sep ’25
Leccy	£926	£882
Gas	£923	£837

Gas is now £45 cheaper than leccy. Of course, a fall in the price of gas has a larger effect on the cost of a domestic gas bill, as it is a far larger proportion of the bill. That makes it difficult to see how a war on gas exploitation in this country is going to drive down the overall domestic energy bill.

Note

The above costs are based on 2.7 MWh of leccy and 11.5 MWh of gas. [Lower usage than originally used for the price cap: was 3.1 MWh / 12 MWh.]

And yes, heat pumps are more efficient than gas, but here we are looking at a typical household using 4 X as much energy from gas as it does from leccy. [And the typical household is not yet suffering the heat pump blues.]