Ofgem announces 10% energy price cap increase

• The price cap will rise to £1,717 per year for Direct Debit customers between 1 October – 31 December 2024
• The current cap, set from 1 July – 30 September 2024, is £1,568
• Electricity will cost 24.50 pence per kWh, with a 60.99 pence daily standing charge

The price cap is reviewed every 3 months but expected to remain high well into 2025

Energy regulator Ofgem has announced a 10% increase on the energy price cap, rising to £1,717 for an average household who pay by Direct Debit from 1 October – 31 December 2024, compared to £1,568 from 1 July – 30 September 2024. 

The price cap is based on typical household energy use and makes sure that prices for people on a standard variable tariff are fair. Those who pay for electricity and gas by standard credit, direct debit, prepayment meter or Economy 7 (E7) meter are covered by the price cap. 

Currently, the energy price cap per unit and standing charge of electricity is 22.36 pence per kWh and 60.12 pence daily standing charge, but will rise to 24.50 pence per kWh with a 60.99 pence daily standing charge.

For gas, the costs stand at 5.48 pence per kWh and a 31.41 pence daily standing charge, moving to 6.24 pence per kWh and a 31.66 pence daily standing charge. 

Frankie Mayo, analyst at Ember, said: “Energy costs are rising because gas prices are now highly unreliable. This is an issue of international markets but impacts households across the country. 

“Gas prices have been rising across the summer and remain higher than pre-crisis levels – building more wind and solar and supporting home insulation will reduce the need to import expensive gas. The UK will continue to lack security against price spikes until the country permanently cuts its fossil fuel dependency.”

The price cap level is reviewed and updated every three months. However, with wholesale gas prices rising throughout the summer, estimates suggest that costs will remain at a higher level into 2025. Prices are still above average compared to before the cost-of-living crisis with certain demographics struggling to pay for gas and electricity. 

Martin Lewis, founder of Money Saving Expert, said: “Last year pensioner homes got up to £300 extra per household cost of living support – that’s gone, and its loss alone is far bigger than the savings made by slightly lower rates. 

“Piling on top of that is the government’s new decision to means test Winter Fuel Payments, that will leave all except usually those who claim Pension Credit missing out on a further £200 – £300.”

The largest increase in cost is in buying energy for customers, with prices rising from £613 to £736, an increase of £123.

However, not all prices have gone up. The cost of buying energy for Government social and environmental schemes has decreased by £1, from £188 to £187, marking another step towards the Government’s clean energy targets. But, despite these ambitious targets, there is still an overwhelming struggle to pay electricity bills. 

Home insulation improvements, revising social tariffs and the price cap mechanism are all short term solutions suggested by energy experts. In the long run, the government aims to reduce the UK’s reliance on costly international fossil fuel markets by turning Britain into a clean energy superpower. 

Lewis concluded: “Deals like E.on Next’s Pledge, or EDF Ensure are effectively discounted trackers, where they move with the price cap, but the unit rates or standing charges are guaranteed to be lower. 

“And for more sophisticated energy users the Octopus Agile and Tracker tariffs where prices move rapidly can be far cheaper.”