The energy price cap is set to rise to £1,717 a year for a typical dual fuel household paying by direct debit, starting from October 1. The increase represents a jump of around 10% from the previous cap of £1,568 per year and will be in effect until December 31. This change comes at a critical time as winter approaches and many households prepare to use more heating.
Households on a standard variable rate (SVR) tariff will be protected by the Ofgem price cap, unless they are on a fixed-rate deal. However, it’s important to note that the price cap does not restrict the total amount you can pay for energy. Instead, it sets limits on the amount you pay for each unit of gas and electricity used, as well as on standing charges, which are fixed daily amounts paid to remain connected to the power grid.
For direct debit payments, the gas unit rate is increasing from 5.48p per kilowatt hour (kWh) to 6.24p per kWh, while the daily gas standing charge will rise from 31.41p to 31.66p. The electricity unit rate is also going up, from 22.36p per kWh to 24.50p per kWh, with the standing charge rising from 60.12p per day to 60.99p per day.
The price cap figure is based on Ofgem’s estimate of the average household’s annual consumption of 2,700 kWh of electricity and 11,500 kWh of gas. Regional variations in rates exist, with the annual capped amount differing based on payment methods. Those paying through pre-payment meters face a slightly lower cap of £1,669, while those paying upon receipt of the bill have a cap of £1,829.
To calculate your new energy bill, expect it to be approximately 10% higher than your current payment. Ofgem revises the price cap every three months, considering factors such as wholesale energy costs, network maintenance expenses, and supplier profits. The latest update reflects prices from May to August 2024, with the new cap taking effect on October 1.