What is the price cap?
The price cap limits the amount you pay for each unit of energy you use. It’s adjusted every three months by Ofgem, the energy regulator, and set at a level that represents the costs suppliers are facing for supplying gas and electricity to your home.
They’ve announced that from 1 January 2024 the average household, with typical energy consumption and paying by Direct Debit, pays around £1,928 for a year’s energy if they’re on a flexible (standard variable) tariff.* Currently, the same household pays £1,836.
Remember, this figure is an average. How much you pay will depend on how much energy you use.
Does the price cap affect me?
If you’re on a flexible (standard variable) or Economy 7 tariff, or use a prepayment meter, the price cap limits the amount you pay for each unit of energy you use. We'll be in touch to share any important updates, with details of how it affects your energy bill.
It doesn’t affect customers on fixed tariffs, because those rates are locked in place for the duration of the contract.
What about the EPG?
The Energy Price Guarantee (EPG) was launched by the Government last October as an additional measure to limit what customers pay for energy. It’ll remain in place until April 2024, but the price cap amount is now lower - so that’s what you’ll see in your bills from 1 October.
The EPG does still protect prepayment customers through a subsidy to standing charges. Learn more about the EPG and prepayment.
To find out more about the EPG and other government support measures for energy customers, visit the Help for Households website.
Could I save by switching to Direct Debit?
Direct debit is the cheapest way to pay for your energy, because it costs energy suppliers less to manage. If you currently pay by other methods after receiving your bill - for example cheque, card, or bank transfer - you’ll almost certainly save money by switching.
The average UK household with a flexible tariff for gas and electricity will save £130** a year from paying by Direct Debit. You can choose from two kinds:
- If you’d like to spread a year’s payments into equal monthly amounts, a monthly Direct Debit smooths out the higher and lower bills, helping you budget.
- If you prefer to pay for what you use each month, a variable Direct Debit lets you still take advantage of the cheaper rates.
* The average annual bill figure is for illustrative purposes only and is based on Ofgem’s national average consumption rates of 2,700 kWh of electricity and 11,500 kWh of gas. Your actual costs may differ based on the amount of energy consumed.
** Savings vary as rates are applied against standing charges and unit rates, but the average household on a flexible tariff (SVT) saves £130 a year by paying with Direct Debit. Your actual costs may differ based on the amount of energy consumed. Direct Debit customers on a fixed tariff save up to £48.00 per fuel, per year.