Ofgem energy price cap April 2024: What is it and how will it affect your energy bills?

Energy bills are set to fall from April

Ofgem has announced a 12.3% reduction of the energy price cap. From April, the typical household energy bill will fall to £1,690, a drop of £238 over the course of a year.

Energy prices will be at their lowest level since Russia’s invasion of Ukraine in February 2022, however still remain higher than pre-pandemic levels.

Here, we’ve taken a look at what is Ofgem, the energy price cap, rates and future price cap changes.

What is Ofgem?

Ofgem (Office of Gas and Electricity Markets), is an energy regulator. Ofgem’s main purpose is to protect consumer interests. It makes sure companies comply with regulation and also investigates possible breaches. Ofgem also works with the industries to help achieve environmental goals. Ofgem works mostly in England, Scotland and Wales, with Utility Regulator taking the majority of Ofgem’s responsibilities in Northern Ireland.

Ofgem introduced the energy price cap in 2019 to stop customers paying excessive energy costs.

What is Ofgem’s energy price cap?

Ofgem’s energy price cap sets a maximum price that energy suppliers can charge customers for each kilowatt hour (kWh) of energy they use. The cap is used to make sure that prices for customers on default energy tariffs stay fair.

Ofgem’s price cap does not mean there is an upper limit on household energy bills. If you use more than the average amount of energy you’ll pay more and if you use less, you will pay less.

What will energy rates change to from April?

Ofgem will cap electricity at 24.50p per kWh, falling from the current cap of 28.62p per kWh. Gas will be capped at 6.04p per KWh, dropping from 7.42p per kWh.

The daily standing charge, used to cover maintenance costs of the energy supply network, will rise from 53.35p to 60.10p for electricity and from 29.60p to 31.43p for gas. These charges can differ depending on supplier and region.

When and how will energy rates change again?

Ofgem sets the price cap every three months.

The levels for the next periods will be announced on May 25 2024 for the period July 1 to September 30 2024, August 27 2024 for the period October 1 to December 31 2024 and November 25 2024 for the period January 1 to March 31 2025.

The energy price cap has been predicted to fall again in July 2024.