Will energy prices go up? When the next Ofgem price cap change is and if bills will rise in 2024
The energy price cap has dropped by 7 per cent to £1,923 under changes that came into force on Sunday (1 October).
This is a reduction of £151 from the previous level of £2,074.
The cap is set for the period of 1 October to 31 December 2023.
Despite the fall in the energy price cap, charities and campaign groups have warned many will still struggle with high energy bills this winter as government support has been scaled back.
The energy price cap limits the unit cost of gas and electricity and standing charges and not the total bill.
What is the energy price cap?
The energy price cap is set by Ofgem, the body that regulates energy suppliers in Great Britain.
This cap limits the maximum amount energy suppliers can charge you for each unit of energy you use.
It was introduced in 2019 as there was concern people were paying too much for their energy.
The price cap is currently reviewed every three months by Ofgem to “reflect changes in underlying costs as well as inflation,” it says.
Due to soaring wholesale energy prices, the Government brought in an extra measure – an energy price guarantee – which ran from 1 October 2022 until 30 June 2023.
This provided a support rate discount to all households with gas or electricity, bringing it down to around £2,500 per year.
However, since July the price cap is now the scheme limiting bills once again. It only applies to variable tariffs and not fixed ones.
Also, it is worth noting, the energy cap limits the unit cost of gas and electricity and standing charges and not the total bill.
How will the new energy price cap affect bills?
The new energy cap means the average weekly cost for a family to use a washing machine will go down 12p (assuming six washes a week), and using a tumble dryer will be 42p cheaper per week.
Homeowners will be paying £1.11 less a week – and £53.36 a year for using the most popular appliances – the oven, washing machine, fridge, TV, tumble dryer and dishwasher.
However, this still does not compare favourably with before the pandemic – the average household is spending £125.88 more now compared with 2019.
Will energy bills go up next year?
i reported that despite the new cap, forecasts show energy bills are expected to increase early next year.
According to a new report by analysts at Cornwall Insight, annual energy bills for a typical household are expected to rise by £73 in January.
It predicts bills could increase to £1,996 under regulator Ofgem’s cap largely because of increases in wholesale energy prices.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “It shows we cannot just assume prices will continue their fall and eventually reach pre-pandemic levels.
“Policies need to be put in place to deal with the possible situation that high energy prices have become the new normal.”
What do campaigners say?
Although the energy price cap is lower than last year, government support has been scaled back.
Last winter, under the government’s Energy Price Guarantee Scheme, household energy bills were limited to £2,500
The Government’s Energy Bill Support Scheme also gave households a £400 discount on their energy bills for winter 2022 to 2023. This ended in March 2023.
The Energy Price Guarantee is in place until the end of March 2024, but it will only come into effect should energy prices go above £3,000 a year. You can find further information here.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, which is part of the Warm This Winter campaign, said: “From October 1, all households in every part of the country will pay more on energy standing charges, more into the profits of energy firms and many are more in debt to their suppliers.
“Average energy bills are still almost double what they were three years ago and Government help for households, which was available last winter, has been axed. This means this winter will feel worse for many households.”
