The July 2024 Energy Price Cap Change Made Simple

In a promising (but not-so-simple) update for consumers, energy regulator Ofgem recently announced that the Energy Price Cap will decrease by 7% starting on 1st July 2024.

This relief could be short-lived, with forecasts indicating a potential 12% rise in October. Here’s a straightforward guide to understanding what these changes mean for you and how you could potentially secure a better energy deal.

What to Expect

From 1st July, homes across England, Scotland and Wales on standard variable tariffs will see their energy bills drop. For every £100 spent now, consumers will typically pay £93 this summer. Notably, the costs for electricity and gas will fall by 9% per unit, though standing charges will remain unchanged. This means that households using a high volume of energy will see more benefits.

While the upcoming price cut is a welcome one, analysts predict a 12% increase in October, driven by wholesale energy costs. This fluctuation means that the average energy bill over the next 12 months is expected to be about 2% higher.

Stick or Fix?

Given the forecasted price rise, fixing your energy tariff now could offer financial stability and savings. Some current fixed deals are already cheaper than the impending July Price Cap.

Additionally, some suppliers offer agile tariffs, which can be significantly cheaper when wholesale costs are low. This type of contract would be ideal for users who can adjust their consumption habits to benefit from cheaper rates at different times.

Specialised tariffs are also available and tailored to consumers' specific needs. Electric vehicle tariffs offer cheaper rates for overnight charging, potentially reducing overall costs for EV drivers. Some energy providers offer multi-year fixed tariffs for those seeking more certainty, though these are typically more expensive.

But should bill payers fix now or wait until July? You shouldn't solely base your decisions on the July Price Cap drop. Fixing prices now can provide year-long stability, and with current fixes being competitively priced, it might be a good time to switch. It's important to note there are no guarantees when it comes to the energy price market, but current market conditions point towards fixing now being beneficial.

Managing Your Energy Costs

Standing charges, the daily fees for maintaining a steady energy supply, remain high at £334 per year for direct debit users. These charges apply regardless of energy consumption, disproportionately affecting lower users. This becomes a particular issue when gas usage drops significantly in warmer months.

Now is an excellent time to check if you are in credit with your energy account. With the central heating season over, you shouldn’t have large credit balances. Consumers with more than a month of credit should consider reclaiming the excess or reducing their direct debit payments.

Reducing energy consumption remains the most straightforward way to lower your bills. Simple actions and efficiency improvements can make a tangible difference without impacting your routine. Refer to our energy-saving tips to identify suitable strategies.

If you struggle to pay your energy bills on time, contact your supplier to discuss your circumstances. Many companies offer hardship and debt grants. For more details, visit Citizens Advice.

In Summary

While the upcoming price reduction is a positive step, the looming rise in October highlights the importance of investigating fixed-price tariffs and other cost-saving measures now. By staying informed, you can better navigate the energy market and secure more predictable and affordable energy costs for your household.

How Can I Save Money on Energy Bills?

With uncertainty over high energy bills and the current state of the UK energy market, consumers are looking for ways to save money on their energy more than ever. At UKPower, we can help you compare gas and electricity suppliers to find the cheapest energy prices, switch to a better deal and cut the cost of your energy bills.

Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.

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