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First published:
22/02/2024

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What you need to know about the household energy price cap decrease

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The UK's household energy price cap is expected to decrease by around 12% in April, saving the average household who uses electricity and gas, and who pays by direct debit, £238 per year.

What is the energy price cap?

The energy price cap refers to a limit on the cost of gas and electricity units that suppliers can charge. Also, it sets a maximum daily standing charge that consumers pay to be connected to the grid. The cap only applies to the cost of the unit – so the more energy you use the more you pay.   

The reduction is being driven by a significant drop in wholesale gas and electricity prices since November and brings the cap down to £1,690 per year for a typical household, a reduction from £1,928 in the first quarter. Energy prices previously rose due to Russia’s invasion of Ukraine in 2022, reaching a peak of £4,059 in quarter one of 2023. 

The Bank of England predicts inflation to hit its 2% target in the second quarter, with Ofgem set to confirm the energy price cap for the second quarter on Friday, February 23rd. However, despite the reduction, concerns about the UK's reliance on natural gas and potential future price shocks persist. 

Despite the predicted decline in the energy price cap, costs remain over £400 higher than pre-energy crisis levels. It’s important to continue to monitor energy use levels and manage your money so you can pay your energy bills. 

To find out more about how the energy price cap will impact your bills there is a useful tool on Smart Energy GB’s website. They are an independent, non-profit, government-backed organisation that helps households and small businesses across Great Britain to understand how smart meters can benefit them, their families and the environment.

Related news about Prepayment meters 

Ofgem, the UK energy regulator, has warned energy suppliers about treating customers fairly when installing involuntary prepayment meters. Involuntary prepayment meters were often installed by energy suppliers when households did not pay previous bills. This practice was previously paused for many energy suppliers. 

Three energy companies – EDF, Octopus, and Scottish Power – have been given permission to restart involuntary prepayment meter installations after meeting Ofgem’s conditions. These include: 

  • Conducting internal audits to identify involuntary prepayment meters installed before the practice was paused in February 2023 
  • Reinstating non-prepayment methods 
  • Offering compensation 
  • Providing regular monitoring data to Ofgem 

Additional measures include making 10 attempts to contact customers before installing a prepayment meter, conducting site welfare visits, and refraining from involuntary installations for high-risk customers. 

Ofgem introduced these measures to prevent a repeat of previous practices, where vulnerable customers were moved onto prepayment meters without their consent. 

What to do if you’re struggling to pay your energy bills 

If you are struggling to pay your energy bills, it’s important to contact your energy supplier for support and learn what options are available to you. If you’re unsatisfied with the outcome, you can contact the Energy Ombudsman to make a complaint.  

Tim Jarvis, Director General for Markets at Ofgem, said:   

“Protecting consumers is our number one priority. We’ve made clear that suppliers must exhaust all other options before considering forced installation of a prepayment meter, and consumers can help themselves by reaching out to their supplier as soon as possible if they think they won’t be able to pay their bill, so payment options can be discussed.” 

Mental Health and Money Advice also has useful resources for tackling bills, financial anxiety, and debt. You can also use our budget planner. 

You can read more about prepayment meters in our managing money with a mental health problem section here. 

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