Skip to content

Energy price cap explained

Jonathan Leggett
Written by  Jonathan Leggett
Kim Staples
Reviewed by  Kim Staples
5 min read
Updated: 02 Apr 2024

Find out what the latest price cap means for your energy bills and what you can do about it.

REMEMBER: The price cap is based on the maximum a supplier can charge if you are an ‘average user’, so if you use more, you pay more...

What's the latest price cap and what does it mean for me?

  • The average annual energy bill is currently capped at £1,690 for the average household on a dual-fuel standard variable tariff, who pay by direct debit. This applies between 1 April to 31 March 2024 and represents a fall of 12.3% from the previous quarter.

  • Average annual bills for pre-pay customers, defined as those who don't pay for their energy by direct debit and use pre-pay meters, are down to £1,643, from the previous cap of £1,917, while households who pay every three months using cash or cheque will see their average annual bill has dropped to £1,796.

  • Changes in the market mean we’re now able to offer a limited switching service, which could save you money or let you sign up to fixed rate to insulate you from any further price rises.

  • Standing charges have been levelised - meaning pre-pay customers no longer pay significantly more than direct debit customers.

  • However, Ofgem has also allowed energy suppliers to add a temporary additional payment of £28 per year (£2.33 per month) to your bill, to ensure they have the funds to cover support for customers who are struggling to pay.

The average annual household energy bill has fallen by £238 with the introduction of a new, lower price cap, relieving a little pressure on cash-strapped consumers struggling with sky-high living costs.

The decrease, which came into force from 1st April and follows a period when energy bills had seemed to be slowly tapering from record levels at the start of 2023, sees the average household energy bill lower by 12.3% to £1,690 for customers who pay by direct debit and are on a variable dual fuel tariff.

Pre-pay customers are no longer subject to higher energy costs, thanks to new levelisation measures, and will see an average annual energy bill of £1,643.

This is welcome news for UK households, who have been facing soaring energy costs for the last couple of years.

lightbulb

Energy price cap rates for 1st April - 30th June

Energy price cap for direct debit

Energy price cap for pre-pay

Energy price cap for other payment methods

Electricity

24.5p per kWh
60.1p per day standing charge

23.72p per kWh
60.1p per day standing charge

25.79p per kWh
65.88p per day standing charge

Gas

6.04p per kWh
31.43p per day standing charge

5.82p per kWh
31.43p per day standing charge

6.36p per kWh
35.21p per day standing charge

What does this mean for me?

It’s estimated that about 29 million households are affected by April’s price cap. That includes four million pre-pay customers.

It's a welcome relief compared to early 2023 energy costs, but still more than 50% higher than the cap was before the energy crisis.

We're hopeful that more suppliers could begin offering switchable fixed-rate deals again soon, providing some certainty over energy bills for Britons.

Our expert says...

"The good news is that the long-term outlook for the market is continuing to improve, so much so that we expect there to be some good opportunities to save money and fix a tariff for 12 months, giving lower energy prices now and protection over the next winter.

"In the meantime, it’s vital you continue to take steps to cut your bills. Try and reduce your consumption and if you’re struggling make sure you let your supplier know as soon as possible.

"Here at MoneySuperMarket will be working hard to support you and we will be pushing energy suppliers to provide everyone with the opportunity to save money." - Emma Spencer, Energy Expert

Should I switch energy suppliers right now?

In normal circumstances, switching has been the best way to save money on energy bills. But as the world lurched from crisis to crisis and energy prices soared in recent years, latterly that’s not been the case.

That’s because suppliers responded to sky-high wholesale energy prices by withdrawing tariffs for new customers, while those available for existing customers were likely to be even higher than you’re paying on your current STV.

In turn, MoneySuperMarket and other price comparison sites were forced to suspend switching because we could no longer save our customers money.

With clear signs that conditions in the energy market are improving at last, we’re now able to offer a limited switching service that may be able to save you money or allow you get the peace of mind knowing you’re insulated by a fixed rate.

Why was the cap introduced?

The price cap was intended as a safety net for customers who do not regularly switch and who are on standard or default tariffs – typically a supplier’s most costly tariff. 

The aim of the cap was to make sure customers who didn’t switch still got a ‘fair price’.

Despite this, variable tariffs set at the price cap level were usually some of the most expensive deals.

What if my energy supplier goes bust?

If your provider does collapse, there’s no need to panic, as Ofgem steps in to protect customers.  

The regulator carries out a process of choosing a new supplier to ‘rescue’ the business.

You can be reassured that your energy supply will continue as normal, and any credit balances will be protected. 

What if I’m struggling to pay my bills?

Crucially, if you’re struggling to afford heating costs, you should contact your energy supplier as soon as possible.

Some providers also allow you to reduce your outgoings by taking advantage of the Demand Flexibility Service.

This offers cheaper energy if you reduce your usage at designated times of day, during certain months. You can check if your supplier is signed up to the Demand Flexibility Service, or is planning to participate in future, by giving them a ring.

You may be eligible for extra help too. This will depend on your circumstances but could include:

Read more here: Where to turn for help with your energy bills

Take steps to reduce your bills

Now is also a good time to take steps around your home to be more energy efficient ahead of increased energy usage during the winter months.

Simple things you can do include switching gadgets off standby, making the move to energy-saving light bulbs, and only boiling the amount of water you need in the kettle.

Need some more pointers? Read our simple tips for being more energy efficient.

Sources and methodology

All price cap data and volume of UK households on a standard tariff provided by Ofgem.