The next energy price cap will come into effect on Wednesday 1 April.
Recent Government action means households will see their energy bills reduce from April – whether they’re on a fixed tariff or the price cap. The price cap is what the energy regulator Ofgem sets as the maximum that energy suppliers can charge households.
Although from 1 April the cap will be lower than it was through the recent winter, it will still be around 30% higher than before the energy crisis in 2022-23. This means many households will still struggle to pay their energy bills.
Ahead of the April price cap coming into effect, Energy UK, the trade association for the UK’s energy industry, has highlighted five important things people should know.
- The price cap is not the actual amount you will pay. The energy price cap is the maximum amount energy suppliers can charge you for each unit of energy and standing charge if you’re on a standard variable tariff. It is calculated by Ofgem and is based on a typical household paying for both gas and electricity by direct debit. From 1 April to 30 June, it has been set at £1,641, but how much you pay will depend on how much you use and your payment method. Pay-as-you-go meters (also known as Prepayment meters) are charged the least, followed by direct debit. Speak to your supplier if you would like to change your payment method.
- Your bill will be lower than it would have been because some costs have been removed. As announced in last year’s Autumn Budget, the Government is removing some policy costs from the energy bill. This amounts to around £134 for the typical customer, but savings will vary depending on how much energy a household uses. This deduction will be taken off your bill, whether you’re on a fixed or a variable tariff, so you don’t need to do anything.
- The price cap will almost certainly increase in July. The conflict in the Middle East has caused significant volatility across gas markets. The impact on the next price cap, effective from 1 July until the end of September, will depend on how high gas prices remain over the next few weeks. Sustained high prices will also impact energy bills in the longer term.
- Installing a smart meter can help you take control of your energy use. Not only do smart meters give people more visibility over how much electricity they are using, but many suppliers also offer time-related deals for free or half-price electricity on certain days or time slots, but you need a smart meter to take part. Having a smart meter also means you don’t have to manually submit meter readings, which can help to get more accurate bills.
- If you’re worried, speak to your supplier. Even as we head into summer and use less energy, it’s understandable that people may be worried about their bills given the ongoing cost-of-living pressures. Suppliers already have a range of additional support in place for customers, and are able to advise on what support is available, but they need to know your circumstances. If you’re struggling to pay, other organisations that can provide helpful advice include Citizens Advice and debt advice charities.
General advice for customers
Although prices are volatile, it’s always worth checking you’re on the best deal – with your supplier or elsewhere.
Other technologies like solar panels (including plug-in), home batteries, or heat pumps come with upfront costs, so they won’t be appropriate for everyone, but could also save significant amounts annually and additional funding could be available through the Government’s Warm Homes Plan or Boiler Upgrade Scheme.
Ned Hammond, Deputy Director for Policy at Energy UK, said:
“The price cap coming into force will see customers benefit from a welcome reduction in their energy bill. While there is understandable concern about how events in the Middle East will affect future bills, it’s worth stressing that these households will not face any rises until July.
“The reduction results from Government action to take some policy costs off the gas and electricity unit price and the exact saving depends on each household’s energy use, the type of building you live in, the kind of heating you use, and even how the bill is paid.
“While this is good news, it’s a major concern that the big increase in wholesale gas costs seen since the start of the Middle East conflict is set to lead to significant bill rises later in the year. Exactly how much remains to be seen but this is why we have urged the Government to start work now so that any support that might be required later in the year is targeted at those who most need it.
“This is another sharp reminder of how events thousands of miles away can directly impact our bills. The only way we can avoid more shocks like this is by reducing the country’s dependence on a fuel that we cannot be self-sufficient in and whose price we can’t control. Gas will continue to play a vital role in our energy system for some time but the debate about North Sea resources should not distract from the fact that the only path to energy security and stable bills is through our own resources of clean power and electrifying our homes, transport and businesses.”
-ENDS-
Notes to Editors
Energy UK is regularly updating its website with various briefings and information around the potential impacts of the conflict in the Middle East.
Energy UK’s latest paper lays out specific actions the Government could take to reduce energy bills.
Energy UK is the trade association for the energy industry, representing companies investing billions of pounds to secure our country’s current and future energy needs. From growing start-ups to major electricity generators, grid and infrastructure developers and energy suppliers, our members are driving change across power, heat, transport and flexibility. We provide a collective voice for the sector working with governments, regulators, charities and other organisations to provide crucial insight that shapes policy, offers solutions and promotes best practice. Our broad view across the whole system supports evidence-based positions which are not tied to particular technologies, and are focused on delivering strategic benefits for people, businesses and the economy. We champion initiatives such as our Vulnerability Commitment, which pushes suppliers to go beyond regulation to support customers with additional needs, and TIDE, the industry’s drive for greater inclusion and diversity. Through our Young Energy Professionals Forum, we support the development of future leaders. We are equally committed to our team and are proud to be recognised as a ‘Gold’ Investors in People employer.
