Lower prices are coming
On 1 July, the energy price households pay for gas and electricity will fall by an average of 7% as announced by the energy regulator Ofgem. This update to the Energy Price Cap reflects the latest adjustments in the energy market. Despite this reduction, energy bills remain significantly higher than they were before the energy crisis began.
The energy price cap, set by Ofgem, is designed to protect consumers by capping the maximum price that energy suppliers can charge per unit of gas and electricity. This cap affects around 28 million households in England, Wales, and Scotland, and is updated every three months.
Key Points on the Latest Energy Price Cap:
New Energy Price Cap Rates
Effective Dates: From 1 July to 30 September.
Gas Price Cap: 5.48p per kilowatt hour (kWh) - down 9% from 6.04p
Electricity Price Cap: 22.36p per kWh - down 9% from 24.5p
Average standing charges and unit rates if you pay by Direct Debit
| NEW Energy Price Cap rates from 1 July to 30 September 2024 | Current Energy Price Cap rates from 1 April to 30 June 2024 | |
|---|---|---|
| Gas | Unit rate 5.48 per kilowatt hour (kWh) Standing charge: 31.41p per day | Unit rate 6.04 per kilowatt hour (kWh) Standing charge: 31.43p per day |
| Electricity | Unit rate 22.36p per kWh Standing charge: 60.12p per day | Unit rate 24.50p per kWh Standing charge: 60.10p per day |
Rates and standing charges are averages, which vary by region. Assumes payments by Direct Debit and includes VAT (at 5%). For those who pay each month after getting a bill, it's 6% higher.
2.Impact on Annual Bills
Typical Annual Bill: A household paying by direct debit will have an annual bill of £1,568, which is a £122 reduction from the previous period (April to June).
Cash or Cheque Payments: Households paying every three months by cash or cheque will have a higher annual bill of £1,668.
Prepayment Meters: Households using prepayment meters will see a typical annual bill of £1,522.
3.Standing Charges:
Remain unchanged at 60p per day for electricity and 31p per day for gas, varying by region.
Includes an additional £28 per year to cover the cost of customer debt.
4.Support for Vulnerable Customers:
Cost-of-Living Payments: Extra support for pensioners and those on means-tested or disability benefits.
Household Support Fund: Extended until September 2024 to help vulnerable households.
Warm Home Discount: Continues for eligible pensioners and low-income households.
Fuel Direct Scheme: Helps repay debt from benefit payments.
Affordable Payment Plan: Energy suppliers must offer these to struggling customers.
A cap on standing charges and unit rates - not a cap on your bill
It is very important to note there is no maximum bill, so the more you use, the more you will pay. The caps relate to the maximum you can be charged for each unit.
The cap is based on a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity annually and this is what the average bill above is based upon.
Considerations for Fixed-Price Deals
This is a tricky one. Prices are expected to go back up in October by 12% and beyond that no one is quite sure what might happen.
If you can find a fixed rate that is lower than the April tariffs then fixing your bill might be something you think about. uSwitch and MoneySavingExpert are worth looking at if this is something you’re considering.
Summary
While the reduction in energy prices is a positive development, the overall cost remains high compared to pre-crisis levels and managing energy expenses is crucial, especially considering the impact they have on household budgets.
Consumers should be aware of their payment options and available support schemes to manage their energy expenses effectively and may wish to consider fixing their tariff.
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Remember the information provided in this article is for information purposes only and should not be considered as advice.
