What is happening to energy bills?


The new energy price cap means gas and electricity bills have dropped by an average 12% in England, Scotland and Wales.

What is the energy price cap?

The energy price cap covers 29 million households in England, Wales and Scotland and is set every three months by the energy regulator Ofgem.

It fixes the maximum price that can be charged for each unit of energy on a standard – or default – tariff for a typical dual-fuel household which pays by direct debit.

From 1 April until 30 June, gas prices will be capped at 6p per kilowatt hour (kWh), and electricity at 24p per kWh. Previously, gas was 7.42p per kWh and electricity 28.62p per kWh.

How much is my bill likely to go down?

What are standing charges and how are they changing?

Although the overall cap has fallen, standing charges – a fixed daily amount which covers the costs of connecting to a supply – have increased.

Standing charges are 60p a day for electricity and 31p a day for gas, although they vary by region.

The regulator is also adding £28 to everyone’s bill over the year to cover the cost of dealing with £3.1bn of debt that customers owe to suppliers.

What is a typical household?

Your energy bill depends on the overall amount of gas and electricity you use, and how you pay for it.

The type of property you live in, how energy efficient it is, and how many people live there, are also relevant.

The Ofgem cap is based on a “typical household” using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single contract for gas and electricity, which they pay by direct debit.

The vast majority of people pay their bill this way, to help spread payments across the year.

Those who pay every three months by cash and cheque are charged more. Their typical annual bill from April will be £1,796, which is £106 more a year than that of a direct debit customer.

This could see a more “dynamic” price cap which might charge customers more during periods of peak demand. Prices could also drop when, for example, more energy is available from renewable sources such as when the wind blows.

What is happening to prepayment customers?

As of 1 April, households with prepayment meters pay the same as those on direct debit. Previously they were charged more.

About four million households had prepayment meters in July 2023, according to Ofgem.

Many have been in place for years, but some meters were installed more recently after customers struggled to pay their bills.

New rules mean suppliers must give customers more opportunity to clear their debts before switching them to a meter, and they cannot be installed at all in certain households.

Image source, Getty Images

Should I fix my energy prices?

The fall in energy prices raised hopes that suppliers would offer cheaper, fixed-price deals.

These offer certainty for a set period, but if prices drop further, people could find themselves stuck at the higher price.

Energy market analysts at Cornwall Insight predict the price cap will see a small fall in July, but increase again slightly in October.

When considering switching to a fixed-price deal, Ofgem says people should seek independent advice and “consider what is most important for them, whether that’s the lowest price or the security of a fixed deal”.

Price comparison website Uswitch says it expects “increased competition” from suppliers, but warns that people to check any exit fees if they want to leave a fixed deal early.

What support is available for energy bills?

But much of that extra support has now finished.

The government’s Fuel Direct Scheme can help people to repay a debt from their benefit payments.

In addition, energy suppliers must offer customers affordable payment plans or repayment holidays if they are struggling to pay bills.

Most suppliers also offer hardship grants.

What help are businesses getting?

The scheme offered a larger discount to heavy energy-using sectors, like glass, ceramics and steelmakers.


Leave a comment