The name “price cap” can be confusing, as there isn’t actually a total cap on how much you can pay for energy, it instead caps the amount you can be charged per unit of gas or electricity you use – this means the more you use, the more you will pay
Energy bills have dropped to the lowest in two years from today as the Ofgem July price cap comes into force.
From today, the yearly energy bill for a typical dual fuel household paying by direct debit has fallen from £1,690 a year to £1,568. The average household paying by prepayment meter for dual fuel has also fallen to £1,522 a year, while someone paying on receipt of bill has fallen to £1,668.
This price cap will be in place from today (July 1) until September 30. However, the name “price cap” can be confusing, as there isn’t actually a total cap on how much you can pay for energy, it instead caps the amount you can be charged per unit of gas or electricity you use – it also covers the standing charge. This means the more you use, the more you will pay.
From today, the unit rate for gas has fallen from 6.04p per kilowatt hour (kWh) to 5.48p per kWh, while the standing charge sits at 31.41p. The unit rate for electricity has also dropped from 24.50p per kWh to 22.36p per kWh and the standing charge sits at 60.12p a day. It’s important to remember that there are different unit rates and standing charges for prepayment customers and those who pay on receipt of bills. These figures are only for people who pay their energy bills by direct debit.
The main price cap figure is used to describe what someone with typical energy consumption can expect to pay each year, based on how much Ofgem estimates the typical household uses. Ofgem says the average household consumes 2,700 kilowatt hours (kWh) of electricity and 11,500 kWh of gas over 12 months. While bills will be at their lowest for two years, they remain about £400 higher than they were three years ago. Here is a full list of the price cap figures over the last few years based on these typical usage figures.
- October 1, 2019 to March 31, 2020 – £1,089
- April 1, 2020 to September 30, 2020 – £1,073
- October 1, 2020 to March 31, 2021 – £993
- April 1, 2021 to September 30, 2021 – £1,084
- October 1, 2021 to March 31, 2022 – £1,216
- April 1, 2022 to September 30, 2022 – £1,887
- October 1, 2022 to December 31, 2022 – £3,371* (£2,500)
- January 1, 2023 to March 31, 2023 – £4,059* (£2,500)
- April 1, 2023 to June 30, 2023 – £3,116* (£2,500)
- July 1, 2023 to September 30, 2023 – £1,976
- October 1, 2023 to December 31, 2023 – £1,834
- January 1, 2024 to March 31 2024 – £1,928
- April 1, 2024 to June 30 2024 – £1,690
- July 1, 2024 to September 30 2024 – £1,568
* The Energy Price Guarantee was in place and capped bills for the typical household paying by direct debit at £2,500 a year.
A new price cap will be introduced from October 1 and will cover the winter months until December 31. Ofgem’s price cap for October to December will be announced on August 27.
