Understanding the New April 2024 Energy Price Cap

*The below information is applicable for domestic users only.

What is an energy price cap?

The energy price cap is the maximum amount you can be charged for each unit of energy, and standing charge when you’re on a standard variable tariff.

Between 1st April 2024 and 30th June 2024, the energy price cap is set to £1,690 per year for a typical user who pays for their gas and electricity via direct debit. This is 12.3% or £238 lower than the previous period.

It was first introduced by the energy regulator Ofgem on 1st January 2019, to try to prevent millions from overpaying for their energy.

Am I covered by the energy price cap?

You are covered by the price cap if you pay for your electricity and gas by either:

• standard credit (payment made when you get your electricity and gas bill)
• Direct Debit
• prepayment meter
• Economy 7 (E7) meter

What is the current UK energy price cap?

Between 1st April and 30th June, the energy price cap per unit and standing charge is approximately:

Electricity

• ‍24.50 pence per kWh
• 60.10 pence daily standing charge

Gas

• 6.04 pence per kWh
• 31.43 pence daily standing charge

However, the actual rates you are charged will depend on where you live, how you pay your bill, and the type of meter you have.

What is included in the energy price cap?

There are different costs included in the price cap. Any changes to these costs will affect how much the price cap will be each time it is reviewed.

For example, if the amount a supplier has to pay goes up, the level of the price cap will go up. If the cost goes down, the level of the price cap will go down.

Factors that contribute to the price cap include:

• Buying energy for customers
• Unexpected temporary cost adjustments
• Build, fix and repair pipes and wires to transport energy
• Supplier business costs
• Government social and environmental schemes
• Earnings before Interest and taxes allowance
• Uncertain costs and risks
• Extra costs for supplying energy using different payment methods
• Making sure prepayments and Direct Debit customers pay the same standing charge
• VAT

When will the price cap next change?

Ofgem reviews and updates the price cap level every three months.

The levels for the next periods will be announced by:

24th May 2024 – period 1st July to 30th September 202427th August 2024 – period 1st October to 31st December 202425th November 2024 – period 1st January to 31st March 2025

What will the future price cap be?

Rising energy bills continue to be a cause of concern when the price cap shifts again in three months' time.

From 1st July to 30th September 2024, the price cap is predicted to drop a further 8%, bringing it down to £1,560. However, from 1st October to 31st December 2024, the price cap is expected to rise once again, by 5% to £1,631 – however, this is likely to shift.