Ofgem confirmed on Friday 24 May 2024 the energy price cap for the third quarter of 2024. The cap, which sets a maximum rate per unit that can be charged to customers for their energy use, will fall by 7% from 1 July to 30 September 2024 compared with the previous quarter1.
For an average household paying by direct debit for dual fuel this equates to £1,568, a drop of £122 over the course of a year1. The average household paying by prepayment meter for dual fuel will pay £1,522 over the course of a year, and the average household paying for dual fuel by standard credit will pay £1,6681. The cap assumes a standing charge of £334 for a dual fuel customer, or £369 for those who pay by standard credit, unchanged from the last price cap period1.
"Energy regulator Ofgem has today (Friday 24 May, 2024) confirmed the energy price cap for the third quarter of 2024."
The charity National Energy Action said the fall would leave 5.6 million UK households in fuel poverty from July, down from 6 million currently, but still above pre-energy crisis levels. It said that in October 2021, 4.5 million UK households were in fuel poverty, with a typical household paying £1,276 a year, and that over 2 million households owe over £3 billion of household energy debt2. National Energy Action noted that a typical household refers to Great Britain households, and that Northern Ireland is a separate energy market2.
| Payment method | Typical annual dual fuel bill from 1 July 2024 |
|---|---|
| Direct debit | £1,568 |
| Prepayment meter | £1,522 |
| Standard credit | £1,668 |
Ofgem said around 28 million customers were on standard variable tariffs as of April 2024, of which around 18 million paid by direct debit, around 5 million by standard credit and around 4 million by prepayment meter. Around 4 million customers were on fixed tariffs, with the vast majority non prepayment1. Suppliers may offer a lower standing charge for their default tariffs under the cap, but to raise the unit rate above that assumed in the cap they need to demonstrate that the overall amount charged to consumers is at or below the total price cap1.
Why it matters for households
The cap limits the rate per unit rather than the total bill, so what a household pays depends on how much gas and electricity it uses. The 7% reduction applies to the unit rates and standing charges that make up the energy bills and the price cap framework, and the level for the coming quarter sits above where it stood before the energy crisis2. The standing charge element is unchanged, so a household using very little energy will see less benefit from the fall than a heavier user.
The cap applies differently depending on how a household pays. Prepayment customers have the lowest typical annual figure of the three payment methods, while standard credit customers pay the most1. The gap between payment methods is set out in the price cap rates by payment method, and the cap does not apply in Northern Ireland, which is a separate energy market2.
For a household's energy independence, the confirmed level sets the default position for the quarter. Fixed tariffs are outside the cap and around 4 million customers were on them as of April 20241. Ofgem said suppliers are free to offer fixed tariffs with a different balance of standing charges and unit rates and many do so1. The level of household energy debt reported by National Energy Action, over £3 billion owed by more than 2 million households, indicates that for many homes the change in the cap does not by itself close the gap between current prices and what they can afford2.
What happens next
The confirmed cap takes effect from 1 July to 30 September 20241. Ofgem is required to regularly review the level at which the cap is set1. The next level, for the fourth quarter of 2024, has not been announced in these sources.