The energy price cap set by Ofgem, Great Britain's energy regulator, is £1,834 per year until 31 December for a typical household paying by direct debit1. The cap limits the amount paid for each unit of gas and electricity consumed, rather than the total bill, so what a household pays depends on how much energy it uses1. The next cap level takes effect from 1 January 20241.
The current figure sits well below the peak of £4,279 in January to April last year, but is still nearly £800 more than three years ago1. Consumer Scotland reported that the cap will increase in January 2024 to £1,928, from £1,834 currently, and that the typical energy bill in October 2023 was 50% higher than in October 20212. On that basis the typical price in the first quarter of 2024 will be 60% higher than it was in January 20222.
The cap covers unit rates and the daily standing charge, which is also regulated by Ofgem and differs by fuel type, location and payment method1. Consumer Scotland noted that increases to the standing charge mean some households, typically those with relatively low energy use, will see higher bills this winter compared to last2. It cited a Resolution Foundation estimate that around one third of households in England will see higher bills this winter than last, adding there is no reason to believe the figure in Scotland will be materially lower2.
Government support has changed. Last winter all households received a universal £400 payment under the Energy Support Bill, and the support package along with other measures cost the government £78 billion in 2022-23 and 2023-241. Consumer Scotland said the UK government did not make any provision for further energy bill affordability support in its Autumn Statement2. Ofgem has reported that energy debt in summer 2023 reached £2.6bn, its highest ever level2.
"The current price cap, set by Great Britain's energy regulator Ofgem, is £1,834 per year until December 31 for a typical household paying by direct debit"
Why it matters for households
The cap sets unit prices, not a ceiling on the bill, so a home's energy independence still rests on how much gas and electricity it consumes and on wholesale gas prices, which also set the electricity price1. Natural gas heats most UK homes and generated nearly 40% of UK electricity in 20221. The UK produces about half the gas it consumes, with another third coming by pipeline from Norway and the balance arriving as LNG or via two interconnector pipelines from Europe1. Europe has record levels of gas in storage this year, but global LNG supply remains relatively tight, so the market could be easily spooked by any interruption in gas supply, causing a short-term price spike1.
Consumer Scotland's autumn 2023 survey found 30% of households say they find it difficult to keep up with their energy bills, down from 35% a year earlier, implying 750,000 households across Scotland2. One third of households are cutting back on food shopping to afford their energy bills, and eight per cent say they are in energy debt or arrears in October 20232. A third of respondents (34%) say energy bills are negatively affecting their mental health either a lot or a fair amount, down from 39% in autumn 20222. Sixteen per cent said they will not be able to heat their home to a comfortable level due to financial concerns, down from 24% twelve months previously2.
What happens next
Ofgem sets the cap from 1 January next year1. Consumer Scotland said the January 2024 cap will be £1,928, up from £1,8342. No further energy bill affordability support has been announced2.