The maximum amount you can be charged for your energy unit by suppliers is set to change. How much more will your bills cost?
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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 April 2024.
A typical household will see their annual bills fall by £238 a year, which is a reduction on the previous annual price cap of £1,928 set between January and March 2024.
Energy price cap
The new energy price cap comes in from April 2024, which will see gas and electric bills fall by 12.3% to £1,690 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 April to June 2024
These rates are for a ‘”typical” household that uses electricity and gas and pays by Direct Debit.
- Electricity rates
Those on a standard variable tariff paying by Direct Debit will see electricity rates at 24.50 pence per kilowatt hour (kWh), with a daily standing charge of 60.10 pence. - Gas rates
Gas will be charged at 6.04 pence per kWh, with a daily standing charge of 31.43 pence for Direct Debit customers.
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 January to March 2024 was 28.62 pence per kWh and 53.35 pence daily standing charge for electricity, and 7.42 pence per kWh and 29.60 pence daily standing charge for gas.
Support for Prepayment Meter users
In an effort to make billing fairer, standing charges for prepayment meter users have been aligned with those paying by Direct Debit.
This adjustment means savings for prepayment meter users, who will no longer face higher standing charges, balancing out the costs between different payment methods.
You will see savings of around £49 per year (£52 including VAT) if you get your gas and electric from the same supplier.
However, people who pay by Direct Debit will pay an extra £10 per year.
Covering debt costs
To ensure energy suppliers can continue to support customers struggling with their bills, a one-off extra payment of £28 per year will be added to bills for anyone Direct Debit or standard credit.
This move is been added to boost the support network for those in need while managing the end of a previous allowance covering COVID-related debt costs.
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.
Where you live in the country, how you pay and what type of energy meter can also impact your final bill.
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.
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Victoria says
That is very useful information.
Thank you so much for doing that work!!!