Ofgem announced the level of the energy price cap for 1 April to 30 June on Friday 23 February 2024. A typical dual-fuel annual energy bill will be £1,690, a drop of 12%1. Within that figure, the regulator has added £28 to annual energy bills for 12 months to help suppliers recover the costs of bad debt1.
The charity National Energy Action (NEA) said total energy debt owed to suppliers by households reached £2.9bn by December 2023, a record amount, and that bad debt is a growing issue for suppliers1. The £28 is included in the level of the price cap1. NEA said the April cap will leave a typical annual dual-fuel bill over £400 a year more than in October 2021, when 4.5 million households were in fuel poverty, and that its own figures show 6 million UK households will be in fuel poverty from April1.
Ofgem also announced it will permanently reduce prepayment meter standing charges so they never exceed the standing charges paid by direct debit customers1. NEA said this levelisation of costs will result in prepayment becoming the cheapest way of paying for energy, something it had been calling for1.
"To help them recover the costs of bad debt, Ofgem has added announced that £28 will be added onto annual energy bills for 12 months, included in the level of the price cap."
Adam Scorer, chief executive of NEA, said the fall in bills was welcome but that the drop still leaves bills significantly higher than before the energy crisis began1. He said a social tariff, action on debt and long-term investment in energy efficiency were needed1. NEA also cited government fuel poverty statistics published days earlier showing fuel poor households in England are falling into deeper fuel poverty, paying on average £417 per year more for energy than if they lived in a more efficient home1.
| Item | Figure |
|---|---|
| Typical dual-fuel annual bill, 1 April to 30 June | £1,690 |
| Fall from previous cap | 12% |
| Bad debt cost added for 12 months | £28 |
| Total household energy debt, December 2023 | £2.9bn |
| Households in fuel poverty from April (NEA estimate) | 6 million |
Why it matters for households
The £28 is a fixed addition inside the cap, so it applies to the unit rates and standing charges that make up a capped tariff rather than arriving as a separate charge. It is temporary, running for 12 months, and it exists because suppliers have not recovered money owed to them. That links a household's bill to the wider debt position of the market: the £2.9bn owed by households is being recovered, in part, through bills paid by households that are up to date.
For a home's energy independence, the practical effect is that a portion of the bill is set by other customers' unpaid accounts rather than by that household's own consumption. The cap figure is also not a ceiling on what any individual pays; it describes a typical dual-fuel household, and use, payment method and region determine the actual amount. The change to prepayment standing charges alters the comparison between payment methods, with prepayment set to become the cheapest way to pay1.
What happens next
The new cap level and the £28 bad debt addition take effect for 1 April to 30 June 20241. The reduction to prepayment meter standing charges is described as permanent1. NEA's estimate of 6 million households in fuel poverty applies from April1. No end date beyond the 12-month period has been reported for the £28 addition.