July 2024 energy price cap confirmed – how will prices change?

by | May 31, 2024 | Bills, Electricity & Gas, News

Ofgem, the UK regulator for energy, has confirmed that the July 2024 energy price cap will fall by around 7% to £1,568 a year.

This is welcome news for households on variable energy tariffs. The average household will see bills drop by £122 a year compared to the current price cap.

Looking further ahead, the price cap is expected to rise in October by approximately 12%. This is encouraging many to opt for a fixed-rate energy tariff of at least 12 months, protecting themselves from further price jumps.

 

What is the energy price cap?

The energy price cap is a maximum limit placed on how much energy companies can charge their customers on default tariffs.

Every three months Ofgem adjusts the cap based on wholesale energy prices. The next price cap change will be on July 1st.

Energy bills are based on consumption, so Ofgem expresses the price cap as the average bill for a 3-4 person household, based on estimated use.

Read more about the energy price cap.

 

What will the July 2024 energy price cap be?

Based on average consumption, a typical household will spend £1,568 a year on energy under the new price cap.

These are the new average unit rates and standing charges for the July 2024 energy price cap.

 

 

Gas

Electricity

Unit Rate

5.48 p/kWh

22.36 p/kWh

Daily Standing Charge

31.41p

60.12p

Figures are rounded to two decimal places and based on the average for people in England, Scotland and Wales average paying by Direct Debit. These prices include VAT. Unit rate prices shown are in pence per kilowatt-hour.

 

How will the price cap change in October?

The July 2024 energy price cap is confirmed, but the future of energy prices is less certain.

Industry analysts Cornwall Insight predicts that the October 1st price cap will rise by 12%, the equivalent of a 4% rise to the current price cap.

Looking further ahead the figures become harder to predict. Currently, the expectation is that the January price cap will stay level at slightly higher than the current cap.

 

Should I switch to a fixed-rate energy tariff?

Under a fixed-rate tariff, your energy prices remain the same as long as you are under contract. Your bills are still based on what you use, but the unit prices and standing charge do not change.

Based on current predictions, you’ll save over the next year if you switch to a fixed rate tariff that’s at least 2% cheaper than the current price cap, even with the price cap dropping in July.

The other advantage is the certainty of knowing what you’ll pay. While the energy market has been more stable recently many consumers are still wary after the sudden price jumps during the UK energy crisis.

Interested in comparing energy tariffs? Book a free call with Please Connect Me and let one of our friendly Connections Experts answer all your questions.

 

Read more about energy in the UK:

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