Energy price cap levels updated for 1 April to 30 June 2024 with standing charge levelisation introduced

Ofgem published the updated default tariff cap levels for charge restriction period 12a, covering 1 April to 30 June 2024, in a letter dated 23 February 2024¹. The Direct Debit cap level falls from £1,928 to £1,690 for a typical customer, a decrease of £238 or 12% compared with the 1 January to 30 April 2024 level¹. The prepayment (PPM) cap level falls to £1,643, down £317 or 16%, and the standard credit cap level falls to £1,796, down £261 or 13%¹.

The cap is not a ceiling on a household's bill. It limits the standing charge and unit rates a supplier can charge on a default tariff, so what a home pays depends on how much gas and electricity it uses. Ofgem's figures use the 2023 Typical Domestic Consumption Values of 2,700kWh of electricity, 11,500kWh of gas and 3,900kWh for multi-register meters such as Economy 7¹. The price cap rates by payment method differ by region and by how a household pays.

From 1 April 2024 Ofgem introduced a levelisation allowance so that prepayment and Direct Debit customers pay the same standing charge¹. Ofgem said the change means Direct Debit customers will typically pay £10 more per year, while prepayment customers will typically pay £49 per year less, or £52 less including VAT¹. The PPM cap level is £47 lower than the Direct Debit level¹. Standard credit customers pay an additional £106 compared with Direct Debit for the period¹.

Ofgem attributed the reduction mainly to wholesale costs, where the allowance fell from £985 to £720¹. The adjustment allowance rose by £17, including £28 for additional debt-related costs, while the COVID-related allowance of £11 per year ended on 1 April 2024¹. Network costs fell from £381 to £368, and policy costs rose from £157 to £188, driven by the Renewables Obligation and the Great British Insulation Scheme¹.

"This policy replaces current support through the Energy Price Guarantee, but this support is due to expire at the end of March 2024."

The Energy Price Guarantee capped typical consumption at £2,500 from October 2022 to June 2023 and £3,000 from July 2023 to March 2024². The National Audit Office estimated the final cost of all domestic and non-domestic energy bills support schemes, now closed for payment, at £44 billion, with the EPG accounting for 54% of total spend².

Why it matters for households

A lower cap level means lower unit rates and standing charges on default tariffs, so a household using typical amounts pays less than under the previous period. The gap between payment methods narrowed for prepayment customers, who had previously faced a premium; the prepayment versus Direct Debit comparison now shows prepayment standing charges aligned with Direct Debit. Standard credit remains the most expensive way to pay, at £106 more than Direct Debit for the period¹. Because the cap sets rates rather than a total, a home that uses more than the typical figures will pay more than the headline number, and one that uses less will pay less; the guide to why a bill can exceed the cap figure sets out how that works. For a household's energy independence, the cap level determines the price of every unit bought from the grid, so a lower cap reduces the cost of grid reliance but does not change how much of a home's energy it supplies itself.

What happens next

The cap levels in this letter apply from 1 April to 30 June 2024¹. Ofgem updates the cap at intervals by applying updated inputs to formulae set by previous decisions, and stated that in doing so it was not making a policy decision or exercising a judgment¹. The Energy Price Guarantee was due to expire at the end of March 2024¹.

Sources2 cited

1. Default Tariff Cap update, ofgem.gov.uk
2. Energy bills support: an update, nao.org.uk