THE Energy Price Cap, which controls what most households pay for energy, will rise by 5% on average from Monday 1 January 2024.
The Price Cap was introduced on 1 January 2019 by regulator Ofgem.
It limits what you pay for each unit of gas and electricity that you use, plus it sets a maximum daily standing charge (what you pay to have your home connected to the grid).
It's based largely on wholesale energy prices (those that firms pay) and applies only to providers' standard and default tariffs, which the vast majority of households are now on.
It has been announced that from 1 January 2024, the Price Cap is set to rise to £1928 a year based on Ofgem's new, lower typical use figures (which changed on 1 October 2023).
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— Ofgem (@ofgem) December 28, 2023
What Ofgem have to say
Ofgem says: "Every three months we review and set a level on how much an energy supplier can charge for each unit of energy.
"From 1 January 2024 the price for energy a typical household who use gas and electricity and pay by Direct Debit will go up by £94. This will take the price cap from £1834 to £1928 per year.
"From 1 January 2024, for a typical user paying by direct debit, the unit rate will be 29p/kWh for electricity and 7p/kWh for gas. The average daily standing charge will be 53 p/day for electricity and 30 p/day for gas.
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— Ofgem (@ofgem) December 29, 2023
"The increase in the price cap is because the cost of wholesale gas has gone up in recent months. This is due to world events including the conflict in the Middle East.
"Historically, people on prepayment meters have paid higher standing charges than Direct Debit customers. This is because it costs energy suppliers more to serve prepayment meter customers.
"The government is currently subsidising prepayment meter customers through the Energy Price Guarantee, to ensure that they pay no more for their energy than Direct Debit customers, but this support is due to expire at the end of March 2024."
