Ofgem announced the price cap for April to June 2024 on Friday 23 February 2024. The Resolution Foundation, analysing the announcement alongside Cornwall Insight forecasts for the second half of the year, said household energy bills are on track to fall by 24 per cent, or £545, in real terms in 2024 compared with last year1.
The Foundation said the latest cap will deliver the second biggest percentage fall in consumer energy prices since its introduction in 20191. It noted that only 16 per cent of annual gas consumption takes place between April and June, against 45 per cent between January and March, so the prices already faced this winter matter most for the year's bills1. Cornwall Insight forecasts put the cap at £1,463 in the third quarter and £1,521 in the fourth quarter of 20241.
The distribution of the fall differs by household. The Foundation said richer households will see the biggest annual cash savings, at £620, because they consume more energy, while poorer households will see the biggest proportional fall, at 4.8 per cent of household income1. Typical annual household energy bills in 2024 will still be 28 per cent, or £360, higher in real terms than pre-crisis levels in 20211.
Insulation standards also show up in the figures. A typical family in an EPC E-rated property is set to face bills of £1,975 in 2024, against £1,540 in an EPC C-rated property1. The Foundation's calculations assume constant energy consumption across the years analysed, using typical consumption levels introduced by Ofgem in October 2023, with prices in 2024 terms1.
"But while energy bills are falling year-on-year, they remain significantly higher than they were before the cost of living crisis. This is especially true for families living in poorly insulated homes, who are having to pay over a third more for gas and electricity compared to living in a well-insulated property."
Why it matters for households
The cap sets the maximum a supplier can charge per unit of gas and electricity, and the standing charge, on a default tariff, so the April to June level feeds directly into what a household pays for each unit it uses. The price cap is not a cap on the total bill: a home that uses more pays more, which is why the Foundation found cash savings largest for higher-consuming households and proportional savings largest for lower-income ones1.
The timing of the fall limits its effect on the year as a whole. Most annual gas use falls in the winter months, so a lower cap from April lands on the lighter part of the consumption year1. The Foundation's comparison with 2021 also shows the level rather than the direction: bills remain 28 per cent higher in real terms than before the crisis1. For a household's energy independence, the gap between an EPC E and an EPC C home, £435 in the Foundation's figures, is the part of the bill that the cap does not move1.
What happens next
The cap announced covers April to June 2024. Cornwall Insight forecasts cited by the Foundation point to £1,463 in the third quarter and £1,521 in the fourth quarter of 20241. The Foundation's figures assume constant consumption and prices in 2024 terms1.