Will the January 2024 price cap change your bills?

by | Jan 8, 2024 | Electricity & Gas

Ofgem, the UK regulator for energy, has updated the UK 2024 energy price cap.

The average household will now pay £1,928 a year for gas and electricity. This is an increase of just over 5% – around £94 – on the October energy price cap.

The price cap, which limits how much energy companies can charge their customers, is shown through an average annual usage, as well as average unit rates and daily standing charges.

Want to find out your new bills? You can calculate your estimated energy bill with our updated utility calculator. Or, read on to find the new unit rates and how to protect against future energy price rises.

How much will my bills be? Find out with our Utility Bill Calculator ›

 

2023 October Price Cap

 

Electricity
Gas
Unit rate per kWh
27.35p 6.89p
Daily Standing Charge
53.37p 29.62p

Rates and standing charges are averages, which vary by region. Based on payment by direct debit and including VAT at 5%. If you pay on receipt of the bill your charges will usually be 6-8% higher.

What is the new 2024 Energy Price Cap? 

 

Electricity
Gas
Unit rate per kWh

28.62p

7.42p

Daily Standing Charge

53.4p

29.6p

Rates and standing charges are averages, which vary by region. Based on payment by direct debit and including VAT at 5%. If you pay on receipt of the bill your charges will usually be 6-8% higher.

 

How does the energy price cap work?

The energy price cap is designed to protect consumers from excessive energy costs.

The cap sets a limit on the maximum amount a supplier can charge per unit of energy. It’s reviewed every three months and adjusted to reflect changes in the wholesale energy market.

This ensures that consumers on variable tariffs are not subjected to unreasonable price hikes. However, as we’ve seen this month the price cap can still rise, bringing up the bills of customers on variable tariffs.

 

How does my supplier calculate my bills?

Although the January 2024 energy price cap is often shown as an annual total, it limits the per unit and daily standing charge cost for your energy.

The per unit cost is the charge for each kWh of gas and electricity you use. If you’re not sure how much energy you use,  our free bill calculator can estimate based on the size of your home.

The daily standing charge is a fixed charge that everyone pays. Your bill will be based on the unit rates multiplied by your energy usage, plus the daily standing charge for the billing period.

 

What does the new price cap mean for my bills?

If you’re on a fixed-rate energy tariff then good news – your bills aren’t going up!

A fixed-rate tariff means the price of your energy won’t change as long as you’re under contract. As long as you use the same amount of energy, your bills will stay the same.

Customers on variable price tariffs will pay the new rate for any energy they use from the 1st of January onwards. The new 2024 energy price cap is around 5% higher than the old price cap, so you can expect your bills to rise by around that amount.

 

Will energy bills go down in 2024?

While there are predictions of a decrease in energy prices for 2024, the future remains uncertain. If you’d like to protect against energy price rises, the easiest way is to switch to a fixed-rate tariff.

This will keep your energy prices at the rate you agree on for the contract – usually at least one year.

 

 

Read more about energy in the UK:

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