How much will bills cost with the new energy price cap?

The maximum amount you can be charged for your energy unit by suppliers is set to change. How much more will your bills cost?

Details of the new energy price cap have been announced, with millions of people now facing a decrease in the cost of gas and electric bills.

The new cap from Ofgem will come into effect from July 2024.

A typical household will see their annual bills fall by £122 a year, which is a reduction on the previous annual price cap of £1,690 set between April and June 2024.

Energy price cap

The new energy price cap takes effect in July 2024. Gas and electric bills will fall by 7% to £1,568 a year for default tariffs.

The energy price cap tells suppliers the maximum prices they can charge customers for energy on a Standard Variable Tariff for suppliers in England, Wales and Scotland.

This is for both the standing charge (what you pay for a daily rate) plus the unit of each energy (kWh) you use.

The energy price cap doesn’t affect you if you are on a fixed deal.

Who benefits from the price cap?

If you’re paying for your energy through standard credit, Direct Debit, a prepayment meter, or an Economy 7 meter, you’re covered by this cap.

However, your actual savings will depend on your household’s energy usage, where you live, and the type of meter you have.

Energy Price Cap rates for June to September 2024

These rates are for a ‘”typical” household that uses electricity and gas and pays by Direct Debit.

While the unit rates have come down, the standing charges are still high.

If you don’t use very much energy at the moment, you won’t see much change in your bills.

• Electricity rates
  Those on a standard variable tariff paying by Direct Debit will see electricity at:
  – 22.36p per kilowatt hour (kWh) unit rate
  – 60.12p daily standing charge
• Gas rates
  Gas will be charged at:
  – 5.48p per kWh unit rate
  – 31.41p daily standing charge

These rates include VAT and are based on the average across England, Scotland, and Wales.

The rates are different, depending on where you live and what type of meter you have.

For comparison, the price cap for April to June 2024 was 24.50 pence per kWh and 60.10 pence daily standing charge for electricity, and 6.04 pence per kWh and 31.43 pence daily standing charge for gas.

Will my bills fall or rise under the price cap?

Although there is a cap on the prices, there is no limit to how much you’d end up paying.

It’s the unit rate and standing charge rate that are capped.

The more energy you use, the higher your bill.

Your final bill can also be impacted by where you live in the country, how you pay, and what type of energy meter you use.

And, these are the default tariffs.

Suppliers may offer cheaper rates, so it could be time to switch.

You need to balance out if you think the rates may go back up again towards the winter months, which predictions look like they may rise again in October.

How can I save on energy costs?

Just because the overall price is coming down, saving money is all about reducing consumption.

We’ve found tonnes of ideas to save money on energy bills.

You may also be eligible for the Warm Home Discount. This will give you £140 in credit on your bill.

What do you do if you cannot afford your energy bill?

Firstly, please don’t panic.

There has been a lot of talk about choosing between heating and eating, but it doesn’t need to come to that.

Don’t try and hide from the situation as it will make things worse.

Get in touch with your supplier and let them know you are struggling.

It could be you are eligible for the Priority Service Register. Again speak to your energy provider (plus your water bill) to see if you can be added.

Ask your energy provider for more time to pay your bill and get a payment plan set up.

You could also ask if they have any hardship funds to help pay off energy debts.

It is worth checking if you can apply for the Household Support Fund, which is a grant managed by your council to help with energy costs and more.