Ofgem announced the new level of the energy price cap on Friday 23 February 2024, covering the period from 1 April to 30 June 2024. A typical dual-fuel annual energy bill will be £1,690, a drop of 12 per cent1. The regulator also said it will permanently reduce prepayment meter standing charges so they never exceed the standing charges paid by direct debit customers, a change known as levelisation1.
The fall leaves bills well above their level before the energy crisis. National Energy Action said the typical annual dual-fuel bill will still be over £400 a year more than in October 2021, when 4.5 million households were in fuel poverty, and that bills remain 49 per cent higher than pre-crisis levels1. The charity's figures show 6 million UK households will be in fuel poverty from April, against 4.5 million in October 20211. tado°, a maker of smart thermostats, said the new cap of £1,690 will still be almost a third more than during winter 2021-222.
Ofgem has added £28 to annual energy bills for 12 months, included in the level of the price cap, to help suppliers recover the costs of bad debt1. Total energy debt reached £2.9bn by December 2023, a record amount owed to suppliers by households1.
Adam Scorer, chief executive of National Energy Action, said:
"This is, of course, good news, any fall in energy bills is welcome. However, the drop coming in April still leaves bills significantly higher than they were before the energy crisis began."
The charity also published polling by YouGov of 2,016 adults in Great Britain, which found that 30 per cent said their household had found it difficult to afford energy bills in the past three months. In that period, 59 per cent had turned their thermostat down lower than they wanted, 52 per cent had turned heating off even though it was cold inside, and 6 per cent had foraged locally for wood or other fuel1.
| Item | Figure |
|---|---|
| Typical dual-fuel annual bill, 1 April to 30 June 2024 | £1,6901 |
| Change on the previous cap | Down 12 per cent1 |
| Added to annual bills for 12 months for bad debt | £281 |
| Households in fuel poverty from April (NEA estimate) | 6 million1 |
| Total energy debt, December 2023 | £2.9bn1 |
Why it matters for households
The cap limits what suppliers can charge for unit rates and standing charges on default tariffs, not the total a household pays, so a home that uses more than the typical amount will pay more than £1,690. The price cap figure is an illustration based on typical use, not a ceiling on the bill itself.
For homes on prepayment meters, the levelisation of standing charges changes the ranking of payment methods: prepayment becomes the cheapest way to pay, where it has previously carried a premium over direct debit. National Energy Action said prepayment households are more likely to be in fuel poverty1.
The £28 added to bills for 12 months is a fixed element within the cap, so it applies regardless of how much energy a home uses. For a household's energy independence, the announcement changes the price of each unit of gas and electricity but not the underlying exposure to wholesale prices, which is what the cap tracks. The gap between the current cap and pre-crisis levels, and the depth of fuel poverty measured by the average fuel poverty gap of £417, indicate that the fall does not restore earlier conditions1.
What happens next
The new cap takes effect on 1 April 2024 and runs to 30 June 20241. The £28 bad debt allowance applies for 12 months1. The reduction in prepayment standing charges is described as permanent1. No date has been reported for when the levelised prepayment standing charges take effect, and no further announcement date is given in these sources.