Energy Bills Set to Drop from July with New Price Cap
Starting 1 July 2024, the energy price cap will decrease to £1,568, a 7% drop from the current cap of £1,690. This brings energy prices to their lowest level since early 2022. The price cap is reviewed quarterly by Ofgem to ensure it reflects changes in energy costs and inflation.
What is the Energy Price Cap? The energy price cap limits the amount energy suppliers can charge for each unit of energy. It’s designed to protect consumers from overpaying and is updated every three months by Ofgem.
Will the Price Cap Affect Me?
- Fixed Tariff: If you're on a fixed tariff, your rates won't change.
- Standard Variable Tariff: If you're on a default or standard variable tariff, the new cap will apply. This includes payment methods like direct debit, standard credit, prepayment meters, and Economy 7 meters.
Changes for Prepayment Meters From 1 October 2023, discounts for prepayment meter customers are applied to the standing charge instead of the unit rates.
How to Manage Your Energy Bills If you pay by direct debit, your bills are estimated. It's a good idea to take a meter reading and contact your supplier to ensure you're paying the correct amount, especially if you're in credit.
Impact on Energy Bills To estimate your household's energy usage, compare the average rate per unit of energy under the new cap with your current bills.
- Typical Household: Ofgem defines a typical household as a two- to three-bedroom home with 2-3 occupants.
- Low Usage: Flats or one-bedroom homes.
- High Usage: Four-bedroom homes with 4-5 occupants.
Energy Usage Breakdown Energy consumption is measured in kilowatt-hours (kWh). For example, one kWh powers a 100-watt lightbulb for 10 hours, while a single cycle of a tumble dryer uses about 4.5 kWh.
Government Support The Energy Bills Support Scheme, which provided a £400 discount to households from late 2022 to early 2023, has ended. However, other schemes like the Warm Home Discount Scheme offer support. Eligible customers, such as those receiving certain benefits or Pension Credit, can get £150 off their winter electricity bill or added to their prepayment meter.
Standing Charges The standing charge is a fixed daily amount for maintaining your energy connection. As of April to June 2024, the average daily charge is 60p for electricity and 31p for gas. This adds up to over £300 a year on average. Ofgem is currently reviewing standing charges, with recommendations expected later this year.
Stay informed and check with your energy supplier to ensure you're getting the best rate under the new price cap.
