Energy bills for households are set to decrease to £1,690 a year from April, under the new price cap set by Ofgem, the national energy regulator.
This is £238 less a year, or around £20 less a month, than what households were paying under the January-March 2024 price cap, set at £1,928 a year.
The price cap for the April-June 2024 period will fall by 12.3% compared to April-June 2023, with energy prices at their lowest levels since Russia’s invasion of Ukraine in February 2022.
The decrease in household energy prices is largely due to the decrease in wholesale energy prices, which has been happening since November 2023, and was predicted by Cornwall Insights, an independent research company, back in January.
Ofgem’s price cap sets the maximum amount suppliers can charge households per unit of gas and electricity. They calculate the yearly energy bill cap based on the average household’s energy consumption.
This means that if your household uses more energy than the standard household between April and June, your energy bills will be higher than £1,690 a year (the upcoming price cap average), but you’ll still be paying less than you would have between January and March.
The price cap affects 29 million households in England, Wales, and Scotland, but not Northern Ireland, where energy prices are regulated by a separate body, The Utility Regulator.
Here are the changes to pricing households in Britain can expect from April:
- Electricity: the cost of electricity will be capped at an average of 24.5p per kilowatt hour (kWh), with a standing charge of 60.1p a day. The current price of electricity is capped at 28.2p per kWh, with a standing charge of 53.35p a day
- Gas: gas prices will be capped at an average of 6.04p per kWh, with a standing charge of 31.43p a day. The current cap is set at 7.42p per kWh, with a standing charge of 29.6p a day
- Households on prepayment meters will no longer pay a higher standing charge than those on direct debit
- Households who pay by direct debit or standard credit will pay £28 more a year, or £2.33 a month, to help cover the £3.1 billion debt struggling customers owe energy suppliers
Jonathan Brearley, CEO of Ofgem, welcomed the decrease in energy bills, but recognised that two years of high bills has left vulnerable households with record levels of debt:
“This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis […]”
“But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall. As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”
Those most affected by energy price rises are ‘fuel-poor households,’ defined as households that spend more than 10% of their income on heating.
Around 6.5 million households are considered to be in fuel poverty in the UK, and the charity National Energy Action (NEA) expects 3 million households in England to still be in this position by 2030 without significant government support.
Support in the form of lower energy prices isn’t enough in the long term, as these can’t be guaranteed to last. The NEA has stressed the need for more government schemes to help poorer households with energy efficient retrofits, such as home insulation, boiler replacements, or heat pump installations, all of which can decrease energy bills.
