Ofgem set new energy price cap at £1568, time to find a better energy deal
This July the energy price cap will fall from £1,690 to £1,568 per year, for the average household (big energy users will likely pay more, small energy users less).
This represents a saving of just over 7% or £122 per year, about £10 per month, compared with the last energy cap set between April and June.
The reduced energy price cap reflects continued falls in wholesale energy costs since the end of 2023. Ofgem’s new cap means energy prices are now at the lowest levels for two years.
What is the energy price cap?
The energy price cap is set by Ofgem the energy regulator. It regulates the maximum price energy providers can charge customers on a ‘standard variable tariff’.
While the energy price cap does not directly apply to fixed-price energy deals, it will influence fixed tariffs, so fixed energy prices are likely to fall as well.
What will electricity & gas cost per unit?
From July 1 to September 31 a unit of electricity will fall to 22.36p per kWh from 24.50p. Gas will fall to 5.48p per kWh from 6.04p.
| Fuel | Price per kilowatt house (kWh) | Standing charge (per day) |
| Gas | 5.48p | 31.41p |
| Electricity | 22.36p | 60.12p |
The daily standing charge for electricity will rise slightly from 60.10 pence to 60.12 pence per day but the standing charge for gas will decrease from 31.43 pence to 31.41 pence per day. So households with both electricity and gas could still pay up to £334 per year (almost £28 per month) before even using any energy!
How much will you save with lower energy prices?
Effectively these reductions mean it should cost around 7% less to run appliances and heating for households on standard variable energy tariffs.
While it is good news that household energy bills are continuing to fall, energy prices still remain higher than before the energy crises which hit at the end of 2021.
What does a lower energy cap mean for fixed price energy tariffs?
A lower energy price cap should also mean better fixed price energy deals from July, if not earlier.
If you are already locked into a fixed price deal you are not able to benefit until your contract is up for renewal, however if you are thinking about moving to a fixed price tariff, it could be a good time to check what fixed price energy deals are around.
Although fixed price energy deals are usually set above the price cap, energy prices historically begin to increase over autumn winter months, so the summer is usually the best time to explore fix energy price deals to lock in rates when energy prices are cheaper.
Many households choose to fix energy prices for longer-term security, knowing what monthly costs and budgets will be, without the risk of potential shocks or sudden price increases.
What will happen to energy prices this winter?
Energy consultancy Cornwall Insight is warning that energy prices will likely rise again this winter. Dr Craig Lowrey advised of continued volatility in the market, with higher energy prices possibly here to stay;
“….we don’t see household energy bills returning to the levels we saw in 2021 this decade.”
Best ways to save money on energy bills
One of the best ways to save money on your energy bills is to reduce your energy consumption. Most households can implement a few simple steps to reduce energy use and lower energy bills. Check out our Top 5 energy saving tips:
Top 5 Energy Saving Tips
- Replace old windows and doors
- Install new loft insulation & insulate exterior walls
- Reduce boiler temperature outputs
- Turn off heating when out
- Replace old bulbs with LED bulbs
For more energy saving tips see our Energy Saving Guide, sometimes saving energy is as simple as turning a dial or flicking a switch!
