Energy price cap to drop to £1,690 in April: How much will you save?
Energy bills will fall by 12.3% on 1 April 2024 for those on price-capped tariffs, it was confirmed this morning.
That equates to a saving of around £20 a month for a home using a typical amount of energy, compared with the current price cap.
Households that use a lot of gas and electricity will see bigger relative savings than those that use little.
That's because standing charges – which everyone pays daily – will go up, while the price of a kilowatt hour of electricity and gas will drop.
So it will cost less to use your appliances and heat your home, but you'll pay more to be connected to the energy networks.
The price cap isn't a limit on your total bill. How much energy you use determines what you pay. It also doesn't apply to you if you have signed up to a fixed deal.
Find out more: what is the energy price cap?
What will my energy cost in April 2024?
The new rates for gas and electricity are:
- Electricity unit rate: 24.5p per kWh
- Electricity standing charge: 60.1p per day
- Gas unit rate: 6.04p per kWh
- Gas standing charge: 31.43p per day
This means that from April to June the 'typical' household will pay around £141 per month for gas and electricity, or £1,690 a year. Currently the same household pays £161 per month, or £1,928.
That's based on using a 'medium' amount of energy, which the energy regulator (which sets the price cap) defines as 11,500kWh of gas and 2,700kWh of electricity.
If you use more or less than this, you'll pay a different amount. Below we've compared the annual energy costs of households using low, medium and high amounts of energy paying the current price-capped rates and the new ones.
| Fuel type | Low user | Medium user | High user |
|---|---|---|---|
| Current electricity rate (29p per kWh) | £515 | £773 | £1,173 |
| New electricity rate (24.5p per kWh) | £441 | £661 | £1,005 |
| Current electricity standing charge (53p per day) | £195 | £195 | £195 |
| New electricity standing charge (60.1p per day) | £219 | £219 | £219 |
| Current gas rate (7p per kWh) | £556 | £853 | £1,261 |
| New gas rate (6.04p per kWh) | £453 | £695 | £1,027 |
| Current gas standing charge (30p per day) | £108 | £108 | £108 |
Based on Ofgem's typical domestic consumption values for a low user (7,500kWh gas and 1,800kWh electricity), medium user (11,500kWh gas and 2,700kWh electricity) aand high user (17,000kWh gas and 4,100kWh electricity).
Prices vary by region and by how you pay.
Direct debit customers and pay-as-you-go customers pay the same amount. This is due to a new plan by Ofgem to start balancing standing charges between prepayment and direct debit customers from April, so that prepayment customers aren't paying more than others for their energy supply.
Ofgem says this change means that prepayment customers who get their electricity and gas from the same supplier will save around £52 a year, while people who pay by direct debit will pay an extra £10 per year to account for it.
These prices will apply from April to June. Energy regulator Ofgem resets the price cap every three months. It's predicted to drop again slightly in July.
Use our energy bill calculator to estimate how much you'll spend on gas and electricity over the next year, based on industry predictions for future price caps.
Then compare energy prices and contracts using our free and independent tool.
Why is the energy price cap going down?
The falling cost of wholesale gas and electricity is the main reason the price cap will fall in April.
The UK has a steady supply of liquid natural gas (LNG) across the Atlantic and there is plenty stored in Europe thanks to mild weather.
Other changes that have impacted the price cap include:
- Bad debt allowance – a one-off £28 charge added to the cap to help suppliers better support customers who are struggling to pay. (This doesn't apply to customers with prepayment tariffs).
- Lessening the difference between the price cap for different payment methods. This adds £10 to the cap for direct debit customers.
Should I fix my energy prices?
When we last checked, there was limited opportunity to save money in the long run by signing up to a fixed-term contract.
The cheapest standalone fixed deal cost £1,665 per year for a medium user, on 20 February 2024.
This is £263 cheaper over a year than the price cap for January to March.
But when the price cap drops in April, this tariff will only save you £25 per year. The price cap is expected to stay below current rates for the rest of the year.
Here's how to get the best energy deal.
If you've fixed your prices above the new rates, find out whether you can get out of your fixed energy tariff
