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What is the energy price cap? How the Ofgem price cap could affect you in 2024

If you’re on a standard variable energy tariff, your unit rate prices will be capped by Ofgem’s energy price cap. But what is the price cap and how does it work? Find out everything you need to know about the energy price cap — including whether it will help or hurt your bills — here.
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Price cap

What is the energy price cap?

The energy price cap is a limit on the unit rates and standing charges that energy suppliers can charge for their standard variable tariffs. The rate is set by Ofgem, the energy regulator, and is reviewed four times a year.

What is the energy price cap currently set at?

The price cap is set at a two-year low of £1,690 for average use dual fuel customers from 1 April to 30 June 2024.

This is a significant drop from the current level of £1,928. It could also be followed by another decrease in the summer. This is mainly due to global events not significantly destabilising wholesale energy prices, which has allowed them to settle down and provide customers with some price stability.

If you're on a standard variable tariff, this is a good time to start assessing your options and comparing energy deals to check whether there are any good options for you. Enter your postcode here to get started.

Run an energy comparison

Enter your postcode below to compare energy prices and get started on your energy switch.

How will the 2024 energy price cap affect my bills?

The cap only applies to the unit rates of standard variable tariffs. These tariffs are typically the most expensive that suppliers offer. If you haven't switched energy before, or you've rolled off a fixed energy deal, you're likely to be on one of these tariffs.

It's important to remember that the cap is based on unit rates - that's the actual price that is changing - but in order to more clearly and easily report it, the "cap level" (currently £1,690) is based on an average use dual fuel customer paying by direct debit. This means that you could actually pay more than the cap amount if you live in a bigger house and/or use more energy.

What are the unit rates and standing charges for the energy price cap?

The average unit rates and standing charges for the April price cap are below:

Unit rates24.50p per kWh6.04p per kWh
Standing charge60.10p per day31.43p per day

Will the next energy price cap level be higher or lower?

It's difficult to say where energy prices will go because the wholesale market is still so unpredictable. However, Cornwall Insight, the energy analyst, regularly examines the latest developments and releases predictions for future price cap levels every few weeks.

The table below shows where the price cap level could go.

Price cap levelAnnual energy cost for an average usage medium-sized household paying by Direct Debit
1 July to 30 September 2023£1,976
1 October to 31 December 2023£1,834
1 January to 31 March 2024£1,928
1 April to 30 June 2024£1,690
Predicted energy price cap (1 July to 30 September 2024)£1,560
Predicted energy price cap (1 October to 31 December 2024)£1,631
Predicted energy price cap (1 January to 31 March 2025)£1,634

What is the Energy Price Guarantee?

In October 2022, when Ofgem's price cap level was forecast to rise to £4,279 in January 2023, the Energy Price Guarantee was introduced to protect customers from unprecedented energy bills. It was designed to act as a "safety" price cap operating at a level of £2,500 per year (subsidised by the government) for average use dual fuel customers.

When the price cap level was announced in May 2023, Ofgem and the government also announced that the EPG's threshold would rise to £3,000. If the price cap level is forecast to rise above £3,000, the EPG would come into effect again. Currently, though, Ofgem's price cap is the prevailing standard variable tariff cap for customers to be aware of. It also opens the door for suppliers to potentially start offering fixed deals again, which would offer customers some sorely needed price certainty again.

What if I'm struggling to pay my energy bills?

During the 2022-23 winter, the government had provided financial support to energy customers in the form of the Energy Bills Support Scheme, which gave each household a £400 discount on energy bills.

There are no similar support measures available for the 2023-24 winter. However, there are more general cost-of-living payments available for those on certain benefits.

These include:

  • £900 for those on certain means-tested benefits to be paid in spring 2023, autumn 2023 and spring 2024

  • £300 for pensioners (in addition to the Winter Fuel Payment) to be paid in winter 2023-24

  • £150 for those on disability benefits to be paid in summer 2023

  • Financial help from the Household Support Fund (via local councils).

You can also check to see if you can get the Warm Home Discount, Winter Fuel Payment and/or Cold Weather Payment, which are paid every year to eligible households.

What is the prepayment meter cap?

The price cap affects the four million prepayment customers in the UK in the same way that it affects those on standard variable tariffs. There is a separate cap for prepayment tariffs, which is reviewed independently of the SVT cap by Ofgem. The current prepayment price cap level is £1,643.

Why is the energy price cap controversial?

There are a few reasons why the energy price cap has come under fire from energy experts:

  • Significant knock-on costs to customers - Since the increase of energy prices in September 2021, the cap has been criticised by suppliers for not allowing them to charge more for standard variable tariffs. This means costs are passed on to customers in one hit when the cap level rises. This is why the cap is now reviewed four times a year, with Ofgem hoping that any wholesale cost savings can be more quickly passed on to customers.

  • Better savings can (usually) be found by switching — This was the case but isn't necessarily true anymore given the wholesale energy market situation.

  • A cap hurts competition — Introducing a cap does not encourage suppliers to compete for business by offering better tariffs or improving customer service. There is no pressure on energy companies to innovate if customers believe they are ‘safeguarded’ from high costs and less likely to take their business elsewhere.

  • False sense of security — The cap can still go up (or down) as energy prices will always be subject to wholesale costs, distribution costs and other factors. The concern is that consumers will assume the price cap means they are protected from fluctuating costs by the government’s cap.

Does the price cap mean I don't need to switch?

Not usually, no. A price cap applies to you if you’re on a standard variable rate tariff. These tariffs are already some of the most expensive on the market, so it’s likely you could (usually) save by at least switching your energy tariff, if you’re not keen on switching suppliers.

Ofgem can raise or lower the level of the cap depending on the wholesale market and, at the moment, the cap is likely to drop in July 2024.

If you're interested in potentially switching, you can compare energy prices and see if there are any deals that are right for you by entering your postcode below.

How is the energy price cap calculated?

The price cap is set by Ofgem, the regulator for the energy industry. The way the cap level is calculated is based on a range of factors, such as the wholesale cost of energy, network costs, policy costs, operating costs and prepayment meter costs.

Ofgem has committed to reviewing the level of the energy price cap four times a year in February, May, August and November. The next review is set to take place in May 2024 for the July update.

Are any suppliers exempt from the price cap?

Ofgem reserves the right to grant temporary or permanent exemptions from the price cap for tariffs and suppliers which make significant efforts to generate and supply green energy to customers. This means that they are allowed to charge rates that exceed the price cap unit rate on SVTs - in other words, the price cap does not apply to them.

Ecotricity, Good Energy and 100Green are the three suppliers who have been granted permanent exemption from the price cap.

How has the price cap level changed over time?

Price cap increase graph
Time periodStandard variable tariff price cap levelEnergy Price Guarantee level
April 2019 - October 2019£1,254N/A
October 2019 - April 2020£1,179N/A
April 2020 - October 2020£1,162N/A
October 2020 - April 2021£1,042N/A
April 2021 - October 2021£1,138N/A
October 2021 - April 2022£1,277N/A
April 2022 - October 2022£1,971N/A
October 2022 - January 2023£3,549£2,500
January 2023 - April 2023£4,279£2,500
April 2023 - July 2023£3,280£2,500
July 2023 - October 2023£2,074£3,000
October 2023 - January 2024£1,923£3,000
January 2024 - April 2024£1,928£3,000
April 2024 - July 2024£1,690£3,000

Highlighted rows indicate periods in which the Energy Price Guarantee was used to cap unit rates instead of the price cap.


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