The energy price cap is the maximum price energy suppliers are allowed to charge customers for their standard variable tariff. This is the default tariff you get from an energy supplier.
The next update to the Ofgem energy price cap will be 1st October 2024. Ofgem set the price cap every three months.
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The price cap applies to the unit price of energy, which is the amount you pay per kWh (kilowatt hour) of energy you use.
A kilowatt hour is a unit of energy. Both gas and electricity are measured in kWh, and you're billed by suppliers for each kWh you use.
According to Ofgem, one kilowatt hour (kWh) is the amount of energy it would take to power a 100-watt lightbulb for 10 hours or a fridge-freezer for 26 hours. An electric oven uses 2kWh every 30 mins.
The next energy price cap will come into effect on October 1st 2024, and prices are predicted to come down slightly. This will affect people on a variable energy tariff.
Changes will be announced at the end of July 2024 to give energy suppliers and customers time to prepare for the change. We'll update this blog ASAP with the new gas and electricity prices, and if you're a One Utility Bill customer on a variable tariff, you'll get at least 30 days notice of price changes to your bills.
From July 1st - September 30th 2024, the price caps per unit of gas and electricity are:
That puts annual bills for a typical household at £1,568 a year. However, suppliers will charge customers per unit, so everybody's bills will look different depending on how much power they use.
The next price cap change is on October 1st, 2024. Ofgem has announced an increase of around 10% to £1,717 a year for the average household.
If you're on a capped energy deal (as opposed to an Unlimited Energy deal) you'll be charged per unit of energy you use at the current price per unit.
Your usage is measured by your energy meter, which is why it's important to submit meter readings.
Your energy meter measures how many units of energy you use, which is why the price per unit has the potential to have such a big impact on your bill.
Your monthly direct debit for gas and electricity bills is usually set at a fixed price, but you'll be charged extra if you go over your usage limit.
Some smart energy meters won't update automatically, so might show the incorrect rate for energy. You'll still be billed correctly, though, and your supplier will keep trying to update it, so eventually it should reflect the actual cost of the power you use each day.
All energy suppliers will change the price of their standard variable tariff after the price cap. If you're on a fixed energy tariff, your price won't change because of the price cap, but you may default to the SVT at the end of your contract.
The energy price cap only sets the price of the standard variable tariff in response to changes in the price of energy in wholesale markets.
The price cap level varies with these changes, explaining the variable part of the standard variable tariff (SVT).
Before the energy crisis, almost everybody was in a fixed tariff. This meant that the price paid per kWh of energy would stay the same until the end of your contract, and your bills wouldn't be affected by price changes in that time. Wholesale energy prices were a lot more stable before the energy crisis, so you were unlikely to lose out too much.
It depends on what you need from your energy bills.
If you're on the standard variable tariff, the amount you pay for energy will change after the price cap. This is true every time the price cap changes, if you're on a SVT.
Your new monthly direct debit will reflect the changes per unit of energy from the date the price cap comes into effect. The price cap also affects how much energy companies can charge you for your daily standing charge.
If you're on a fixed energy contract, no need to worry, the energy price cap won't affect you 'til the end of your contract.
You'll always get at least 30 days notice of any changes to your monthly payments.
How the SVT affects your payment will depend on the type of package you have. You can get in touch via your customer dashboard if you have any questions.
When you sign up for your One Utility Bill package, your quote is based on the cost of energy for the whole of your contract. If the costs we base your package on turn out to be different than the price cap that's actually announced, your price will be updated.
If you're not a One Utility Bill customer, but you like the idea of a bills package, why not find out what a bills package is and how it could simplify your finances?
Ofgem is the independent energy regulator for Great Britain, which is England, Scotland and Wales. Northern Ireland is covered by a different regulator.
They work with the government and energy suppliers on behalf of consumers - basically anybody who pays bills! Part of their role is to make sure energy is sustainable, customers get the right information and services from their suppliers, and manages prices with the energy price cap.
More info about your household energy usage