(Information correct at the time of writing – 29/11/2023)
Energy Price Cap Changes for January to March 2024
The Energy Price Cap, set by energy regulator Ofgem, limits the maximum amount energy suppliers can charge customers for each unit of energy they use. The cap is updated every three months to reflect changes in underlying energy costs and inflation.
Current Cap and Upcoming Increase
For October to December 2023, the cap is set at £1,834 for a typical household using gas and electricity and paying by direct debit. However, due to recent increases in wholesale gas prices, Ofgem has announced a 5% increase to the price cap for January to March 2024. This means the average household bill is set to rise by around £94 annually, taking the price cap back up to around the levels we saw in July to September this year.
Impact on Energy Bills
The Energy Price Cap applies to those on default energy or standard variable tariffs, including those who pay by direct debit, standard credit, prepayment meter, or who have an Economy 7 (E7) meter. Those on fixed tariffs are not affected by the price cap.
If you’re on a direct debit tariff, your bills are based on an estimate of how much energy you use. If you’re in credit, it’s worth doing a meter reading and contacting your supplier to check you’re paying the right amount.
The standing charge is the fixed amount you pay for having a gas and electricity connection, regardless of how much energy you use. It covers things like maintenance of the supply network, meter readings, and government and environmental schemes.
The amount you pay for the standing charge depends on your supplier, tariff, and location. The average daily standing charge for electricity is 53p a day, and 30p a day for gas.
Ofgem is currently reviewing standing charges and you can submit feedback until 19 January 2024. The feedback will help Ofgem set recommendations to be published next year, leading to a policy on standing charges.
Potential Future Cost Changes
Analysts at Cornwall Insight forecast energy costs to fall through the spring and summer of 2024, before rising again towards the end of the year. Their forecast shows prices dropping back to £1,816 from April to June 2024, and £1,793 from July to September 2024.