Energy price cap to drop by 7% from July 2024

The average household will pay £1,568 a year

The energy price cap is falling again, this time by 7%, taking it to £131 a month. Energy prices are now at their lowest since Russia’s invasion of Ukraine, but still roughy £400 higher than pre-pandemic levels.

Here’s what you need to know about the cap and how much you’ll pay.

How the energy cap works

The energy price cap is a limit set every three months by Ofgem, the government’s energy regulator. It restricts how much an energy company can charge customers.

The cap applies to the price of your gas and electricity on your energy company’s default or standard variable rates. These basically can go up and down whenever the energy company likes. With the cap, the energy companies have to make sure their tariffs aren’t higher than the set rate.

Despite how it looks, it’s not the most you can pay for your bills. Instead, the prices set on the cap are the maximum price per unit of energy you use. Ofgem announces the figure as an annual price, as you probably don’t have a clue how many kwh of energy your family uses. 

The quoted “cap” (£1,568) is an annual price based on a typical household. If you use more energy, you’ll pay more than the cap every year. Use less and you’ll pay less.

There are separate caps for gas and electricity, and each cap is also made up of a standing charge (a set amount each day, regardless of whether you use any energy) and a usage charge. 

The cap will also vary depending on where you live in the UK. Prepayment caps have always been a little higher, though that changed earlier this year. The new energy price cap also applies to those with a prepayment meter. 

Crucially, if you’re on a fixed-rate deal the cap doesn’t apply and the price you pay won’t change until that fix ends.

What is the new energy price cap?

The latest announcement is for a drop to the price cap from 1 July until 30 September 2024.

The new cap for a “household with average use” is £1,568 a year. This is down by about £122, or 7% from the current rate, making it about £10 less per month than our current bills

What is the monthly price cap?

Despite Ofgem attempting to present the information in a way we understand, the total annual cap figure isn’t always the easiest to comprehend, so we think it’s easier to understand the price cap when you view it as a monthly direct debit.

Your energy company calculates this by taking the predicted cost for a year based on your previous energy usage and dividing it by 12. It’s not 100% accurate, but it’s a handy comparison.

For the latest cap, the average monthly bill will be £130.67, which is £10.16 less every month than the current cap.

What is the current energy price cap?

The previous announcement in August increased the cap from 1 April until 30 June 2024 to £1,680 for the average household. This is with the new typical use figures.

When will the new cap come into play?

This new energy price cap will come into play on 1 July and will remain in place until 30 September. In August, there will be another announcement which will detail what the price cap will be from 1 October. 

How much will you pay under the new energy price cap?

Remember, the price cap figures are based on average use. If you use more than this average you’ll pay more, if you use less you’ll pay less. Plus, it can vary regionally so you’ll need to check where you live to see exactly what it’ll be for you.

If you want to get a rough quick idea, you can minus 7% from what you pay at the moment (multiply your current monthly bill by 0.93). This doesn’t take into account the balance between unit and standing charges, or whether you’ve got an accurate direct debit set-up, but it could give you a sense.

Will you pay more or less money with the new energy price cap?

If you’re on a variable tariff

Broadly, anyone on a standard tariff will be charged less per unit of energy from 1 July 2024. Of course, the bill itself will be based on your actual energy use. 

If you’re on a prepayment meter

The really good news is that there is no longer a significant premium for those with prepayment meters. The last cap and new cap are the same as for everyone else.

If you’re already on a fixed tariff

If you’re fixed onto a tariff, your prices usually don’t change when the price cap changes. That’s because you’ve already agreed on a price per unit of energy for a fixed length of time with your energy supplier, usually 12 months. However, some fixes were reduced if they were above the EPG, so this could happen again if there are any drastic changes.

If you move onto a new fix

We’ve seen some fixed deals returning to the market recently. It might be worth checking them out to see if you’ll save. However, it could fall down the line, so be careful you don’t lock into a higher deal.

That’s because any comparison site is required to compare prices to what you’re paying now. So you could be told you’ll save money, but in reality, there’s a risk you’ll fix higher than the price cap rate.

How has the price cap changed?

As you can see, the really big changes have happened since October 2021. Before this the average direct debit was under £100, so even with this new cut, we’re still paying more, and even more on top if you had been saving with a lower fixed rate deal.

These are the energy price caps going back to 2019, we’ve roughly adjusted them for the new typical use figures. You can see the historical price caps with the old figures below.

DateCost per year with new typical use figuresEPG & grantsAverage monthly billChange (+/-)
July to September 2024£1,568£3,000 EPG£131-7.2%
April to June 2024£1,690£3,000 EPG£141-12.34%
January to March 2024£1,928£3,000 EPG£161+5.13%
October to December 2023£1,834£3,000 EPG£153-7.95%
July to September 2023£1,992£3,000 EPG£166-17.04%
April to June 2023£3,151£2,402 EPG£200+50.33%
January to March 2023£4,110£2,402 EPG & £67/m grant£1330.00%
October to December 2022£3,409£2,402 EPG & £67/m grant£133-15.62%
April to September 2022£1,893£158+54.35%
October 2021 to March 2022£1,227£102+12.21%
April to September 2021£1,093£91+9.21%
October 2020 to March 2021£1,001£83-7.46%
April to September 2020£1,082£90-4.50%
October 2019 to March 2020£1,133£94-5.98%
April to September 2019£1,205£100+10.29%
January to March 2019£1,092£91
Estimated costs, due to the change in the typical domestic consumption

The energy price cap vs the energy price guarantee

In October 2022 a couple of government subsidies were introduced, which meant no one was actually paying the cap. First, was a £400 discount added to all gas and electricity accounts, saving everyone £67 a month for six months, with the last payment hitting accounts in March.

Combined with this was another price limit called the Energy Price Guarantee (EPG). The idea is that the government pays the difference between the two rates if the EPG is lower than the price cap.

Until July 2023 the EPG was £2,500 a year (on average). It was then raised to £3,000.

At the same time, the price cap fell to around £2,000, meaning prices were governed by that lower cap rather than the EPG.

When is the next price cap change?

The price cap is reviewed every three months (though prior to October 2022 it was every six months).

The price cap will next change on 1 July 2024. We already know that this is £1,568. After this, it’ll change again on 1 October 2024, a change that will be announced in August 2024.

Price cap announcements & changes

  • Announcement by 27 August 2024 for 1 October 2024 change
  • Announcement by 25 November 2024 for 1 January 2025 change

Will bills fall further?

The current predictions are that the price cap will increase in October 2024 by about 12%.  

How you can reduce your bill

Paying by direct debit will reduce your bills, so it’s well worth doing this.

Otherwise, it’s hard to do much to reduce what you spend on energy other than by using less energy. The standing charges will still apply, and bills will still be sky-high, but cutting back on gas and electricity will mean you pay less.

It’s worth giving accurate meter readings if you’re not on a smart meter. This will mean you’re more likely to have an accurate direct debit on current use, rather than what you used last year, and stops you from falling into debt on your energy account. Your energy firm will probably not change this automatically, so you might need to ask.

Don’t forget a direct debit does average the spend out over the year so you should hope to overpay in the summer and underpay in the winter to help even out your bills.

Is any other help available?

There’s been no new energy bill subsidy announced, and it’s unlikely it’ll happen.

You can talk to your energy supplier to see if they have support or grants available for customers. British Gas has a grant for non-customers too. We’ve written about your options and the consequences if you can’t or choose not to pay.

Historical energy price caps

These are the energy price caps from before the typical use figures changed. This change made it difficult for us to compare new caps with the old ones, so we’ve converted the old price caps into ones with the new typical figures above.

DateMax annual bill for a typical householdAverage monthly direct debitChange +/-
October to December 2023£1,923 price cap / (£3,000 EPG)£160.25-7%
July to September 2023£2,074 price cap / (£3,000 EPG)£173– 17%
April to June 2023£2,500 EPG / (£3,280 price cap)£208 (£273.33 without EPG)+ 19% (-23.3%)
January to March 2023£2,100 (£2,500 EPG – £400 grant) / (£4,279 price cap)£175 (£356.58 without EPG and grant)+ 0% (20.5%)
October to December 2022£2,100 (£2,500 EPG – £400 grant) / (£3,549 price cap)£175 (£295.75 without EPG)+ 8%(+80%)
April to September 2022£1,971 price cap£162.25+54%
October 2021 to March 2022£1,277 price cap£106.42+12%
April to September 2021£1,138 price cap£94.83+9%
October 2020 to March 2021£1,042 price cap£86.83-7.5%
April to September 2020£1,126 price cap£93.83-4.5%
October 2019 to March 2020£1,179 price cap£98.25-6%
April to September 2019£1,254 price cap£104.50+10.2%
January to March 2019£1,137 price cap£94.75

8 thoughts on “Energy price cap to drop by 7% from July 2024

  1. My Octopus monthly bill is 300 GBP per month but I am quadruple glazed and with French doors all at top U values 4 bed detached home. I am not sure why.

  2. I am with Octopus. I have a quadruple glazed house throughout (Finnish windows with the lowest U values). I have Huet (JH Industries) ISADEX Climat front doors from France, the best noise fire and heat insulating doors in Europe. I have two doors to the garden both double glazed. My boiler is traditional so I have a tank above in the attic and so on (not combi). I put the boiler (it is a 2009 Worcester Bosch) in the attic. My attic is completely insulated with thick fibre glass insulation. There are no holes to the outside in the house. It is a detached four bedroom house with cavity wall. I made all these changes in my detached home not to hear a neighbour’s dog. Why are my gas and electric bills consistently 300 GBP per month. Can you help me? you have my email. I would appreciate your advice.

  3. I’m not interested what the average bill will be. I want to know what I will pay. I need to know the price per therm and price per unit of gas

  4. I should add that I paid no exit fees. The exit fees for the new fix are very hefty, but waived if I stay with the same supplier.
    If you fix around October/November, the prices are likely to reflect the predicted January increase. If you are already on a fix, you are likely to get a good offer, though there have already been substantial increases since I fixed at the beginning of August. For existing customers on the price cap with my supplier, the offers are truly horrendous. 3 or 4 times higher than my offer, so this probably only works for those already on fixes.
    Again I stress, I am only giving my experience, not advice.

  5. Andy. I’m trying to understand how the price cap works for a medium / high user of gas and electric. My supplier just failed and I’ll be moving onto a SVR soon. I’m a high user of gas so will there be no benefit to me from the cap ?

  6. Andy, My current tarrif ends on 15th November. Should I opt to switch before 1st October or make the most of the 1
    Month’s deal?

    1. Hi Daniel, it’s hard to say but you will need to take into account any exit fees (though these are waived 49 days before your tariff ends). I’d expect the new rates to be so much higher that you’d save the difference by switching before.

    2. Don’t know if this helps. My fix was due to end on October 31 this year. My DD was down to £45. per month. I checked the latest figure for an new fix offered to me by my supplier and it came to less than £2000 a year, so I came off the old fix at the beginning of August and took it. It’s a 2 year fix. I’m now paying £148 a month and it should average £163 based on my current annual usage. I’m paying more than £100 a month more between now and the end of October than I would have done on the old fix. The new unit prices I am paying are slightly higher than the October price cap, so if I am paying less than £2000, I must be using a lot less energy than average.
      Where do I gain in all this? Hopefully from January 2023 onwards, when my costs will remain fixed and I won’t pay the new increases. I will need to save a bit over £300 to break even, but from current predictions, this shouldn’t be difficult and I’ll go on to gain. I noticed that that the latest offers on fixes from my supplier have already gone up by £70 per month since I fixed.
      This is just my experience and guessing and not advice, as it’s a bit like gambling on the futures’ market, but I hope it helps.


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