I am pleased to see that Ofgem has today announced a significant reduction of the energy price cap for the second quarter of 2024.
The price cap, which sets a maximum rate per unit that can be charged to customers for their energy use, will fall by 12.3% on the previous quarter from 1 April to 30 June 2024. For an average household paying by direct debit for dual fuel this particular reduction equates to £1,690, a drop of £238 over the course of a year – saving around £20 a month. To contextualise this, the price cap for 1 January 2023 was £4,279.
This will see energy prices reach their lowest level since Russia’s invasion of the Ukraine in February 2022 caused a further spike in an already turbulent wholesale energy market, driving up costs for suppliers and ultimately customers.
However, despite reaching this welcome milestone, Ofgem recognises that the cost of living remains high and many customers continue to struggle with their bills as standing charges rise and energy debt reaches a record figure of £3.1 billion.
Therefore, today Ofgem is also announcing:
- Confirmation of the levelisation of standing charges to remove the ‘PPM premium’ previously incurred by prepayment customers.
- A decision to allow a temporary adjustment to the price cap to address supplier costs related to increased levels of bad debt.
- A decision to extend the ban on acquisition-only tariffs (BAT) for up to another 12 months.
- Confirmation of the end of the Market Stabilisation Charge (MSC) from April 1.
- A decision not to change wholesale cost allowances following a review conducted in late 2023.
