The changing energy price cap

Rightcharge energy tariff guidance for electric car drivers

Summary:

• Ofgem have announced the energy price cap will increase by 54% from 1st April
  
• Electric car drivers who charge their car at home could reduce annual bills by an average of £300 by switching to an EV-friendly energy tariff
  
• They can compare EV-friendly tariffs on www.rightcharge.co.uk
  
• Drivers who have already fixed their rates are likely to be best off by sticking with their current tariff
  

What is the energy price cap?

The price cap is the maximum amount an energy supplier can charge on their standard variable tariffs. It’s reviewed every six months by the energy regulator, Ofgem, who have just announced that it will rise by 54% from 1st April.

What is the implication of the price cap increase for electric car drivers?

Currently, standard variable tariffs are the cheapest rates as they have been kept artificially low by the price cap.

However, these tariffs will rise by 54% from 1st April onwards and fixed rate tariffs are likely to offer lower bills for electric car drivers. Specifically, specialist EV-friendly tariffs are likely to be better value than other fixed rate tariffs in the market. 

Electric car drivers are uniquely capable of shifting a large amount of their home electricity usage overnight by scheduling a delay to the start of their charge. EV-friendly tariffs often offer cheaper off-peak rates overnight, which means drivers can reduce their car charging costs by hundreds of pounds per year. Each unit of electricity consumed overnight generates around 25% less carbon than electricity consumed during the evening period, so the shift in usage reduces carbon emissions as well as energy bills.

Rightcharge has a unique position of having a full market view of electric vehicle tariffs. Our experts have crunched the numbers on the back of this announcement alongside our existing tariff data, and our predictions are that annual energy bills for the average car driver will be:

• £2,558 on an EV-friendly tariff based on today’s rates (that’s £2,305 for their home and £283 to power their car)
  
• £2,894 on a standard variable tariff from 1st April onwards (£1,982 for their home and £912 to power their car)

This is based on electricity and gas usage for an electric car owner who lives in a medium sized household and drives 7,400 miles per year (the UK average).

What is our advice to drivers?

The most important advice off the back of this announcement is that drivers who are currently on a variable tariff, or whose fixed rates are coming to an end, should compare offers in the market. Based on our prediction, the average driver in this situation could save over £300 per year.

Finding the best tariff for your needs will depend on many factors, such as your energy requirement needs, annual mileage, size of car, and so on. We recommend using a specialist comparison service that takes all of this into account. Rightcharge’s EV Tariff comparison service considers all of these factors to give you an accurate estimate and the ability to find the best deal in just a few clicks.

The good news is that if a driver is already on a fixed rate, they are likely to be best off staying on that tariff. Our advice to these drivers is to make a careful note of their tariff end date when the greatly increased standard variable rate will kick in, and at this point to review their options using a specialist EV tool.

Quote from Charlie Cook, CEO:

“The cost of standard variable tariffs is about to rocket by 54% from 1st April as Ofgem increases the price cap. 

Electric car drivers are in a unique position as they’re able to reduce bills by switching to an EV-friendly home energy tariff, many of which offer reduced electricity rates overnight. 

By switching away from a variable tariff to an EV-friendly tariff, drivers can schedule for overnight charging and reduce their bills by an average of around £300 per year. By doing so they will also be charging on electricity that is roughly 25% cleaner in comparison to electricity consumed during the evening hours.”