Energy price guarantee helps ‘cushion’ impact of rising prices for EV drivers
Tue, 13 Sept 2022
- Government has announced a new energy price guarantee to counter rising energy costs.
- Electric vehicle (EV) drivers were facing a price increase from 28p/kWh to 52p/kWh; it will now go up to 34p/kWh.
- Drivers will need to contact their energy provider to find out the exact price of their new tariff.
EV drivers face an energy price rise of 34p per kilowatt hour (kWh) from October instead of the planned 52p/kWh, under the Government’s new energy price guarantee.
Previously, energy regulator Ofgem announced that the price cap would jump by 80 per cent to £3,549 per year for dual fuel for an average household from 1 October 2022, meaning substantial increases for the cost of charging an electric car at home
However, Prime Minister Liz Truss has replaced this with a new energy price guarantee, effective from October, which will mean a typical UK household will now pay up to an average £2,500 a year on their energy bill for the next two years.
The Government said that this will save the average household at least £1,000 a year based on current energy prices from October and is in addition to the £400 energy bills discount for all households.
Impact on electric vehicle drivers
RAC spokesperson Simon Williams said the energy price guarantee will “significantly cushion the impact of rising energy prices affecting drivers of electric cars”.
He said that from 1 October it will cost on average £22.22 to fully charge a typical 64kWh family-sized electric SUV, £3.85 more than it does currently, and a third less than it would have cost under the new cap that was announced by Ofgem on 26 August (£33.80).
Research by online used car marketplace heycar found that the gap between the cost of running a typical small diesel car versus a full electric car would have significantly closed under the 80 per cent rise, with a difference of less than 1p-per-mile(ppm) between a Nissan Leaf e+ and a 1.5-litre diesel Ford Focus (based on charging the Leaf e+ from 0 to 100 per cent at a cost of 52p/kWh).
The new energy price guarantee means there is a 5ppm gap, with the Leaf e+ costing 8.39ppm and the Focus 13.50ppm, based on the latest diesel price of 182.49p-per-litre.
heycar has also compiled a list of the top 10 best-selling EVs in 2021 and the cost to charge in September 2022 versus the potential cost to charge from October 2022. It calculates that the Tesla Model 3 Long Range, for example, currently costs £21.28 to charge from zero to 100 per cent (based on an estimated useable battery capacity of 76kWh) and this will rise by £4.56 to £25.84 from October. Under Ofgem's price cap it would have risen to £39.52. See the full list here.
These examples are averages, based on peak prices, and EV drivers will need to contact their energy provider to find out the exact price of their new tariff. The cheapest deals are likely to be fixed price, overnight tariffs but some energy providers have temporarily stopped offering these tariffs for EV drivers.
Concerns about rising public EV charging costs
Questions still remain over public electric vehicle charging costs.
Williams said: "It remains to be seen what impact the Government’s new package of help will have on charge point operators and the prices they set drivers, but we remain concerned about the rising wholesale costs of energy that may force some to increase their prices in the coming months.
"There’s the potential for the Government’s net-zero transport ambitions to be derailed if higher electricity prices put drivers off from switching to an electric model, which is why we have called on the new transport secretary to cut the 20 per cent VAT rate on public charge points to match the five per cent charged on domestic electricity."
What is the energy price guarantee?
The Government has replaced the energy price cap with an energy price guarantee. This limits the amount you can be charged per unit of gas or electricity. For a household on a standard variable tariff it has been set at 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October 2022.
This means a typical household in Great Britain will pay an average £2,500 a year on their energy bill, for the next two years, from 1 October 2022, according to the Government. Under the energy price cap the average bill would have been £3,549.
What is the energy price cap UK per kWh?
The energy price cap for electricity is currently 28.3p per kilowatt hour (kWh). Under October's energy price cap it was due to be 51.8p but under the new energy prrice guarantee it will be 34p.
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