The energy price cap came down on 1 October 2023, reducing the maximum amount energy suppliers can charge for standard variable tariffs1. The reduction was short lived: Ofgem has since confirmed a 5% rise in the cap from 1 January 2024, following the reduction in the previous quarter2.
The regulator's announcement of the January increase was reported on 24 November 2023, with rising wholesale energy costs and market instability blamed for the upward revision2. The cap is not fixed and can vary based on market conditions1. The price cap history sets out every level since 2019 and when the next is announced.
For electricity, the new typical unit rate under the January cap is 29p per kWh, up from 27.35p per kWh2. On that basis, the annual cost of charging an electric car at home rises by between £25 and £32 depending on vehicle class, based on 7,050 miles driven a year2.
| Vehicle class | Current price cap | New price cap | Increase |
|---|---|---|---|
| City cars | £538 | £563 | £25 |
| Small cars | £580 | £607 | £27 |
| Medium cars | £609 | £637 | £28 |
| Large cars | £615 | £644 | £29 |
| Compact/small SUV | £622 | £651 | £29 |
| Medium/large SUV | £693 | £725 | £32 |
Figures are annual home charging costs based on Which? lab efficiency data and 7,050 miles a year2.
The same data shows the most efficient electric car tested, the Hyundai Ioniq 6, facing a £22 rise in annual running costs and an average fuel bill of £502, while the least efficient, the Mercedes Benz EQV, faces a £45 rise and an average annual energy cost of £1,0042. Home charging remains cheaper than petrol or diesel for comparable cars at the new unit rate, though the point at which petrol becomes cheaper ranges from 48p per kWh for small cars to 61p per kWh for large cars2. Public chargers are often two to three times more expensive than charging at home2.
"Despite the cap lowering from October 1, recent reports predict that the cap is set to rise afterwards, possibly resulting in higher energy bills for households across the country."
So Energy also cited Cornwall Insight analysis indicating the cap will likely rise in 20241. The wholesale prices behind these movements are covered separately.
Why it matters for households
The cap limits the unit price on a standard variable tariff, so a lower cap from 1 October meant a lower maximum rate for the quarter, and the confirmed January rise means that rate goes back up2. For a household on a variable tariff, the direction of the cap sets the ceiling on what a unit of gas and electricity can cost, though the actual bill depends on how much is used. For a home charging a car, the change is small in cash terms but moves in the same direction as the rest of the bill2. A fixed rate tariff locks in rates for a set period, so prices do not change if Ofgem raises the cap or a supplier announces a rise1. The energy bills and the price cap guide explains how the cap translates into a bill.
What happens next
The 5% rise takes effect from 1 January 20242. The cap is reviewed and revised for each quarter, and further changes after that date have not been reported in these sources.