The official price cap will be in place from 1st October to 31st December and is set by Ofgem, the energy regulator. The cap will be £118 lower than during the same period in 2023, but much higher than the October 2021 cap of £1,216. This was prior to the war in Ukraine and the soaring gas and electricity prices that followed.
Why are energy bills going up?
The war in Ukraine continues to have an effect on the energy market. Gas and electricity suppliers are facing higher prices, which are being passed on to consumers.
Principal consultant at consultancy firm Cornwall Insight, Craig Lowrey said the “lingering impact of the energy crisis, has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.”
Ofgem also said that extreme weather events have contributed to heightened international energy market price rises.
While Lowrey and Cornwall “don’t expect a return to the extreme prices of recent years”, the next cap “may well be the new normal”. This suggests that we may be some way off the seeing the likes of the October 2021 price cap of £1,216. Meanwhile the sub £1,000 price caps last seen in October 2020 may be a thing of the past.
What is the energy price cap?
The energy price cap was introduced by the government's energy regulator Ofgem (Office of Gas and Electricity Markets) to control the maximum amount that providers are allowed to charge consumers for each unit of gas and electricity. Ofgem calculates the price cap every three months and takes into account wholesale energy prices, the cost to provide energy and VAT. It then provides an annual figure based on the average dual-fuel household that pays via direct debit.
The energy price cap is based on the average dual-fuel household bill and how much you will actually pay will vary depending on how much energy you use.
Energy price cap figures - 2019 to 2024
Here is a brief history of the energy price cap going back to 2019:
| Date Energy Price Cap is effective from | Energy Price Cap |
| 1st October 2019 | £1,089 |
| 1st April 2020 | £1,073 |
| 1st October 2020 | £993 |
| 1st April 2021 | £1,084 |
| 1st October 2021 | £1,216 |
| 1st April 2022 | £1,887 |
| 1st October 2022 | £3,371 |
| 1st January 2023 | £4,059 |
| 1st April 2023 | £3,116 |
| 1st July 2023 | £1,976 |
| 1st October 2023 | £1,834 |
| 1st January 2024 | £1,928 |
| 1st April 2024 | £1,690 |
| 1st July 2024 | £1,568 |
| 1st October 2024 | £1,717 |
How much will you pay for energy under the new price cap?
The following table shows how much you can now expect to pay for each unit of gas and electricity. The figures will vary depending on where you live in the UK. Remember, the amount you pay under the new price cap will be based on your energy usage and the charges stated below, assuming you pay by direct debit.
| Current energy price per unit
(1st July - 30th September 2024) |
New energy price per unit
(1st October - 30th December 2024) |
|
| Electricity | Daily Standing charge: 60.12p
Unit price per kWh: 22.36p |
Daily Standing charge: 60.99p
Unit price per kWh: 24.50p |
| Gas | Daily Standing charge: 31.41p
Unit price per kWh: 5.48p |
Daily Standing charge: 31.66p
Unit price per kWh: 6.24p |
(Source: Ofgem)
To keep your next energy bill is as low as possible, make sure to send your latest gas and electricity meter readings as soon as you can.
Of course, any household with a smart meter does not need to worry, as your usage will be tracked automatically.
What will happen to the energy price cap in the future?
Cornwall Insight expects the price cap to rise again by a "modest" amount on 1st January 2025, the next point at which it can change.
This is a prediction based on the expectation that there will be continued unrest in Ukraine and Russia that will affect the UK's supply of natural gas, pushing energy prices up. Of course, predictions can be wrong, but it is something to consider when weighing up whether to switch to a fixed energy tariff or whether to stick with your current tariff.
Is now a good time to switch to a fixed energy tariff?
You need to consider what is important to you. The energy price cap changes every 3 months, while fixed deals typically last 12 or 24 months. There is a danger that should you fix, a better deal may be just around the corner. Alternatively, a fix may leave you with a relatively low bill if prices subsequently soar. The real benefit to fixing your energy deal is the assurance that you know exactly what you will be paying for your energy over a set period. While better deals could come to market during your fixed period, you are protected should there be a sudden surge in energy prices. However, there are one or two fixed energy tariffs that don't charge exit fees, meaning that customers are free to switch to a better deal, should one become available.
If you simply want to ensure you pay less than the energy price cap, Eon Next's Pledge tariff might be worth considering. Unlike a fixed energy tariff, rather than providing you with a set price for your energy, the tariff fluctuates, tracking 3% below the energy price cap figure. We cover this tariff in more detail as well as a roundup of the best fixed-price energy tariffs on the market in our article 'What is the cheapest fixed price energy tariff? - Best deals compared'.
What to do if you're struggling to afford your energy bills
Your energy supplier may be able to help you arrange an affordable repayment plan if the cost of energy is becoming overwhelming, so it is best to contact them as soon as possible. We provide some tips if you are struggling to afford your energy bills in our article 'How to save money on your energy bills'.
There are also a number of grants and schemes available for those who are most vulnerable. More information and help on the cost of living can be found in our Cost of Living guide.
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