Energy bills are set to fall for millions of households this summer. Energy regulator Ofgem is expected to announce a new price cap later this week.
Consultancy Cornwall Insight predicts that the price cap, which determines the cost of gas and electricity for the average household, will fall from its current level of £1,690 per year. The current cap, which applies from 1 April to 30 June, represents a 15% reduction on the previous cap of £1,928.
Energy prices have stabilised over the past year and the current cap is the lowest for two years, following a peak of £4,059 in early 2023.
What Will the New Price Cap Be for Households?
Based on the closing market prices on 16 May 2024, Cornwall Insight forecasts that the new price cap, effective from July to September, will be £1,574.37. This figure includes £832.40 for electricity and £741.98 for gas.
The company's analysis uses the new values for standard household consumption together with the ongoing charges and unit rates that calculate overall bills.
Ultimately, these rates set the price cap imposed by Ofgem, capping charges per unit of energy used rather than total energy consumption.
This means that households that use more energy than average will pay more, while those that use less will pay less.
Recently, Ofgem revised its definition of a typical household, now considering that a typical domestic customer uses 2,700 kWh per year for electricity and 11,500 kWh per year for gas.
This represents a reduction on previous figures and reflects the seasonal variation in consumption. Cornwall Insight's forecasts for default tariffs are as follows:
Electricity:
- Standing charge (£/day): 0.06
- Per unit costs (p/kWh): 22.68
Gas:
- Standing charge (£/day): 0.32
- Per unit costs (p/kWh): 5.45
What About the Rest of the Year's Energy Bills?
According to MoneySavingExpert, Cornwall Insight predicts the following changes in the price cap, at which point accuracy decreases further into the future and these figures may change:
October-December 2024: £1,631 per annum (an increase of 4%)
January-March 2025: £1,634 per year (an increase of 1%).
Do I Have to Pay my Energy Bills Now?
Choosing whether to pay your energy bills depends on your individual circumstances. Martin Lewis, founder of MoneySavingExpert, recommends that you stay within the price cap unless you can get a fixed rate 4% below the current price cap for the April-June period.
Several cheaper energy offers are available, mainly for existing customers, but also for new customers. Costs will depend on your energy consumption and your geographical location. MoneySavingExpert has a calculator to help you work out the best option for you.
Offers available are:
- E.on Next Pledge v5: Available to new and existing customers, this is not a fixed rate but offers a £50 discount off the price cap for 12 months, approximately 3% less at average annual use. Requires monthly direct debit and online account management, plus a smart meter installation where possible. Dual-fuel or electricity-only options available, with a £25 per fuel exit fee for previous tariff holders. Switching to this version restarts your 12-month term penalty-free.
- Ecotricity Green 1 Year Fixed: Available to new and existing customers, this 12-month fixed rate is around 9% below the price cap. Requires smart meters and payment by monthly direct debit. Available as dual-fuel, electricity-only, or gas-only.
- Outfox the Market Fix’d Dual May24 v2.0: A 12-month fixed rate for new and existing customers, about 8% below the price cap. Requires online account management, available as dual-fuel only, and does not require smart meters.
- British Gas Fixed May25 v4 / Lighter 12m v3 / Fixed Tariff 12M v4: A 12-month fixed rate for new and existing customers, around 7% below the price cap. Available as dual-fuel, electricity-only, or gas-only, with no smart meters required. Additionally, British Gas offers half-price electricity on Sundays until 8 September 2024 to some eligible customers.
