The energy price cap will rise from £1,834 a year to £1,928 when it changes in January, meaning households will face eye-watering bills for another winter.
The price cap, which was introduced by the energy regulator Ofgem in 2018, limits what a supplier can charge on their standard variable, or default, tariff. The cap is based on the price per kWh of electricity and gas that can be charged. It isn’t, however, a limit on total bills, as these depend on usage, so those who live in large properties or who consume a large amount of energy could well see annual bills much higher than £1,928.
Consumers are being urged to take gas and electricity meter readings by September 30 at the latest to help reduce the chances of them being overcharged. Providing an accurate reading means that your energy supplier is less likely to base your bills on estimated readings, which may not reflect the amount of energy you’re using. If you’re worried about ever-increasing energy prices, read our article The energy bills crisis: what can you do about soaring costs?
The October price cap was the lowest the energy price cap had been since March 2022. The rise in the energy price cap comes before an expected fall in March, meaning that most households will still face particularly high bills this winter. Household energy bills remain around double what they were before Russia’s invasion of Ukraine, and the £400 energy rebate the government gave last winter won’t be received this winter. This is expected to place further pressure on households who are already struggling to make ends meet.
Dr Craig Lowrey, principal consultant at energy analysts Cornwall Insight, said: “Amid the cost-of-living crisis, the last thing households need is a rise in energy bills – especially going into the winter months.
“However, as is often the case in the energy market, new challenges have arisen, and our reliance on foreign energy has once again left the UK vulnerable to price increases caused by events around the globe.”
Until July, typical energy bills were capped at £2,500 a year under the government’s Energy Price Guarantee, but this was a temporary measure.
The energy price cap is back in force, and will now change every three months. It’s predicted that energy prices may fall later in 2024, but this depends on the wider economic and geo-poliical landscape. The energy market is hugely volatile, and these forecasts are changing regularly. You can find out more about the price cap in our guide What is the energy price cap?.
The latest energy price cap announcement comes as many households are struggling to make ends meet as prices rise across the board. Despite inflation falling to 4.6% in October, following a reduction in the energy price cap, prices are still rising and it remains more than double the government’s 2% target.
Jonathan Brearley, chief executive of Ofgem, said: “It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.”
The cap affects around 22m UK households, who are already seeing their energy bills at their highest level since the cap was introduced.
Default tariffs are usually suppliers’ most expensive tariffs and in the past many energy customers have been able to save hundreds of pounds by switching to a cheaper fixed rate deal. However, soaring global energy costs have meant that for several months, suppliers have been unable to offer deals lower than the price cap.
Many suppliers ceased trading altogether last year due to rising wholesale costs and the cap limiting the amount they can charge customers. If your supplier has stopped trading, find out what happens next in our guide What happens if my energy supplier stops trading?
At present, any fixed rate tariffs that are available are typically only on offer to existing customers. If you are considering moving to a new energy deal, check carefully for any exit penalties first. Find out more in our article Should I fix my energy bills?
What is the government doing to help?
The energy price cap may be rising again, but government support with energy bills ended in April, meaning many people are still likely to struggle to make ends meet. It paid every household a total of £400 to help with bills, with the money paid in six instalments from October.
Support is still being provided to those receiving Universal Credit, Tax Credits and legacy benefits this year You can find out more about how to claim here and about when the payments are being made in our guide Date of second cost of living payment announced.
What other help can I get with energy bills?
You may be eligible for a £140 discount off your energy bills under the Warm Home Discount scheme, if your supplier belongs to it and you are receiving the Guarantee Credit element of Pension Credit, or you’re on a low income and receive certain means-tested benefits.
To check which energy suppliers offer the discount, you can visit GOV.UK.
During particularly cold weather, you may be eligible for Cold Weather Payments of £25. These are made when your local temperature is recorded as (or forecast to be), an average of zero degrees celsius or below for at least seven consecutive days between 1 November and 31 March every year.
If you are already receiving any other low-income benefits (i.e. Pension Credit) then you should be eligible to receive it – and if you are, you should receive it automatically, so there’s no need to apply.If your home is badly insulated, you might qualify for help to make improvements that will make it more energy efficient and keep you warmer.
You can use the links below to find out more about schemes that may be available to you depending on where you live:
- England – The Simple Energy Advice website
- Scotland – Home Energy Scotland
- Northern Ireland – Energy Saving Grants in Northern Ireland
- Wales – Nest Scheme
Find out more in our guide Are you eligible for help with heating costs?
How can I reduce my energy costs?
Making a few simple changes around your home can help reduce your energy bills.
For example, according to the Energy Saving Trust, you can save around £35 a year just by remembering to turn your appliances off standby mode, whilst cutting back your washing machine use by just one cycle per week can save you £8 a year on energy.
Similarly, hanging up your wet clothes to dry rather than using a tumble dryer is an easy way to reduce your energy consumption and could save you up to £70 per year, according to Ovo Energy.
Learn more in our article Energy saving tips: how to reduce your bills.
What if I can’t pay my bills?
If you’re finding it impossible to cover your energy costs, get in touch with your supplier as soon as you can and explain that you’re having financial problems. They are obliged to give you advice on how to pay back the money you owe and should suggest a repayment plan that will still leave you enough money to live on. If you’re struggling with energy debt, your supplier might be able to offer a grant to help repay this. Find out more in our article Is your energy supplier offering grants to pay off energy debts?
Don’t worry that a missed energy bill will be followed by disconnection – it won’t.
You may be told by your energy provider that your gas and electricity supply could be disconnected if you haven’t paid a debt after 28 days of being notified. However, usually your supplier will offer a variety of options to repay your debt, rather than disconnect you, such as a repayment plan or prepayment meter.
Find out more in our guide What can you do if you can’t pay your energy bills?
Where to find advice
Working out how you’ll cover energy bills can feel overwhelming, and if you are struggling it’s a good idea to seek professional advice as soon as possible.
There are plenty of free sources of advice available and many charities and organisations can help you negotiate debt repayment plans with your creditors on your behalf. These include:
- Citizens Advice – 0800 144 8848 (England) 0800 702 2020 (Wales)
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
- PayPlan – 0800 280 2816
Whatever happens, don’t suffer in silence, as struggling with debts on your own can take a real toll on your mental health. If you are finding it hard to cope, our article Are money worries affecting your mental health? explains where to go for help if you need someone to talk to.
Gillian Cooper, the head of energy policy at Citizens Advice, said: “Increasing numbers of people we help are in a negative budget, where they simply don’t have enough money coming in to cover even just their essential bills. The next few months will push households like these over the edge. Our data suggests it will be as bad, if not worse, than last winter.
“Government must step in quickly with more targeted support for the households who need it most.”
Rest Less Money is on Instagram! Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.