Energy price cap falls to £1,690

The energy price cap will fall from £1,928 a year to £1,690 when it changes in April, the lowest the cap has been for two years.

The price cap, which was introduced by the energy regulator Ofgem in 2018, limits what a supplier can charge on their standard variable, or default, tariff. The cap is based on the price per kWh of electricity and gas that can be charged. It isn’t, however, a limit on total bills, as these depend on usage, so those who live in large properties or who consume a large amount of energy could see annual bills much higher than £1,690.

A fall in wholesale prices has led to the fall in the energy price cap for April to June, which is good news for homeowners struggling with soaring bills. However, energy bills remain high and millions of households will still find it difficult to meet household expenses.

Jonathan Brearley, chief executive of regulator Ofgem, said that energy bills for the average household will have fallen by £690 by April since Russia’s invasion of Ukraine in February 2022. This caused a spike in wholesale energy prices, driving up costs for both suppliers and customers.

He said: “But there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.”

If you’re worried about ever-increasing energy prices, read our article The energy bills crisis: what can you do about soaring costs?

Household energy bills remain significantly higher than they were before Russia’s invasion of Ukraine, and the £400 energy rebate the government gave last winter hasn’t been paid this winter. This has placed further pressure on households who are already struggling to make ends meet.

Until July 2023, typical energy bills were capped at £2,500 a year under the government’s Energy Price Guarantee, but this was a temporary measure.

The energy price cap has been back in force since then, and currently changes every three months. While the latest fall in wholesale energy prices is welcome news for consumers, the energy market is hugely volatile, and prices are changing regularly. You can find out more about the price cap in our guide What is the energy price cap?

Despite inflation remaining at 4% in the year to January, as increases in food prices have begun to moderate, prices are still rising and it remains double the government’s 2% target.

The cap affects around 22m UK households, who are already seeing their energy bills at their highest level since the cap was introduced.

Default tariffs are usually suppliers’ most expensive tariffs and in the past many energy customers have been able to save hundreds of pounds by switching to a cheaper fixed rate deal. However, soaring global energy costs have meant that suppliers have been unable to offer deals significantly lower than the price cap.

Many suppliers ceased trading altogether last year due to rising wholesale costs and the cap limiting the amount they can charge customers. If your supplier has stopped trading, find out what happens next in our guide What happens if my energy supplier stops trading?

At present, there are few fixed rate tariffs that are available to new and existing customers. Find out more in our article Should I fix my energy bills?

Emily Seymour, energy editor at consumer association Which?, said: “Some fixed deals are currently available for close to the predicted April price cap but most of these deals will save consumers very little when it comes into force. With the price cap predicted to remain fairly stable for the rest of 2024, more competitive deals may become available in the coming months. 

“As a rule of thumb, we wouldn’t recommend fixing a contract longer than 12 months, higher than the April price cap or with significant exit fees – in case circumstances change and you want to switch to a better deal.”