Energy price cap to increase by 1.2% from January 2025 

The common family pays £1,738 a 12 months

The power worth cap goes up, taking a typical invoice to round £145 a month. Vitality costs might be barely decrease than January-March final 12 months, and are nicely down on their peak, however nonetheless roughy £500 larger than 2021’s pre-Ukraine invasion ranges.

Right here’s what you want to know concerning the cap and the way a lot you’ll pay.

Some articles on the positioning comprise affiliate hyperlinks, which offer a small fee to assist fund our work. Nevertheless, they received’t have an effect on the value you pay or our editorial independence. Read more here.

How the power cap works

The power worth cap is a restrict set each three months by Ofgem, the federal government’s power regulator. It restricts how a lot an power firm can cost prospects.

The cap applies to the value of your fuel and electrical energy in your power firm’s default or commonplace variable charges. These mainly can go up and down every time the power firm likes. With the cap, the power firms have to verify their tariffs aren’t larger than the set charge.

Regardless of the way it appears, it’s not essentially the most you’ll be able to pay in your payments. As a substitute, the costs set on the cap are the utmost worth per unit of power you employ. Ofgem publicizes the determine as an annual worth, as you in all probability don’t have a clue what number of kwh of power your loved ones makes use of. 

The quoted “cap” (£1,738) is an annual worth primarily based on a typical family. In case you use extra power, you’ll pay greater than the cap yearly. Use much less and also you’ll pay much less.

There are separate caps for fuel and electrical energy, and every cap can be made up of a standing cost (a set quantity every day, no matter whether or not you employ any power) and a utilization cost. 

The cap may also fluctuate relying on the place you reside within the UK. Prepayment caps have all the time been somewhat larger, although that modified earlier this 12 months. The brand new power worth cap additionally applies to these with a prepayment meter. 

Crucially, when you’re on a fixed-rate deal the cap doesn’t apply and the value you pay received’t change till that repair ends.

What’s the new power worth cap?

The most recent announcement is rise to the value cap from 1 Januaryuntil 31 March 2025.

The brand new cap for a “family with common use” is £1,738 a 12 months. That is up by about £21, or 1.2% from the present charge, however payments are nonetheless 50% larger than pre-Covid ranges.

In case you break it down to every precise unit price, the common caps are:

• Electrical energy standing cost: 60.97p per day
• Electrical energy unit cost: 24.86p per kilowatt hour (kWh)
• Gasoline standing cost: 31.65p per day
• Gasoline unit cost: 6.34p per kilowatt hour (kWh)

The Ofgem web site has a full breakdown of the regional caps for all standing charges and units.

What’s the month-to-month worth cap?

Regardless of Ofgem making an attempt to current the knowledge in a approach we perceive, the full annual cap determine isn’t all the time the best to understand – particularly since our power use adjustments all year long however this cover solely applies to 3 months,

On the similar time, it’s not a flat enhance to all payments as there may very well be totally different share adjustments to standing fees and unit charges.

So we predict it’s simpler to know the value cap whenever you view it as a month-to-month direct debit. Your power firm calculates this by taking the expected price for a 12 months primarily based in your earlier power utilization and dividing it by 12. It’s not 100% correct, but it surely’s a useful comparability.

For the newest cap, the common month-to-month invoice might be £144.83 which is £1.75 extra each month than the present cap.

What’s the present power worth cap?

The present worth cap (1 October to 31 December) is £1,716 a 12 months, primarily based on the common family. That is with the brand new typical use figures.

This was elevated by 9.5% from £1,568 in comparison with the earlier three months.

When will the brand new cap come into play?

This new power worth cap will come into play on 1 January and can stay in place till 31 March. In February 2025, there might be one other announcement which can element what the value cap might be from 1 April 2025. 

How a lot will you pay underneath the brand new power worth cap?

Bear in mind, the value cap figures are primarily based on common use. In case you use greater than this common you’ll pay extra, when you use much less you’ll pay much less. Plus, it could actually fluctuate regionally so that you’ll must test the place you reside to see precisely what it’ll be for you.

If you wish to get a tough fast thought, you’ll be able to add 1.2% from what you pay for the time being (multiply your present month-to-month invoice by 1.012). This doesn’t bear in mind the steadiness between unit and standing fees, or whether or not you’ve received an correct direct debit set-up, but it surely might provide you with a way.

Get the very best of our cash saving content material each Thursday, straight to your inbox

+ Get a £20 Quidco bonus (new members solely). More details

Will you pay roughly cash with the brand new power worth cap?

In case you’re on a variable tariff

Broadly, anybody on a regular tariff might be charged extra per unit of power from 1 January 2025. In fact, the invoice itself might be primarily based in your precise power use. 

In case you’re on a prepayment meter

The actually excellent news is that there isn’t a longer a major premium for these with prepayment meters. In reality, it’ll be barely much less at £1,690 on common for the 12 months.

In case you’re already on a hard and fast tariff

In case you’re fastened onto a tariff, your costs often don’t change when the value cap adjustments. That’s since you’ve already agreed on a worth per unit of power for a hard and fast size of time along with your power provider, often 12 months.

Must you repair your power?

We’ve seen extra fastened offers returning to the market this summer time. Or not it’s value checking them out to see when you’ll save.

You’ll be evaluating costs primarily based on the value cap now, somewhat than January’s one, so it’s probably most fixes will say you’ll pay extra.

But when the rise proven on the repair is decrease than 1.2%, you’ll be paying much less for January to March. Since all of us use essentially the most power in these months, it’ll symbolize an even bigger saving.

In case you go for considered one of these, keep in mind that some will cost an exit payment if you wish to swap suppliers earlier than the top of the time period.

There are additionally some tariffs that observe at under the cap, so that you’ll all the time pay much less. On the time of writing these are from Eon (no exit charges) and EDF (£50 exit charges).

In fact, these can change, so it’s value utilizing a comparability website to see what charges can be found.

Will payments go up once more?

The present predictions are that the value cap will fall in April 2025 by about 1.4% bringing payments right down to £1,713 a 12 months, however so much can change in that point.  

When is the subsequent worth cap change?

The worth cap is reviewed each three months (although previous to October 2022 it was each six months).

The worth cap will subsequent change on 1 January 2025. We already know that that is £1,738. After this, it’ll change once more on 1 April 2025, a change that might be introduced in February 2025.

Worth cap bulletins & adjustments

• Announcement by 25 February 2025 for 1 April 2025 change
• Announcement by 26 Might 2025 for 1 July 2025 change
• Announcement by 27 August 2025 for 1 October 2025 change

How one can scale back your invoice

Paying by direct debit will scale back your payments, so it’s nicely value doing this.

In any other case, it’s onerous to do a lot to scale back what you spend on power apart from by utilizing much less power. The standing fees will nonetheless apply, and payments will nonetheless be sky-high, however reducing again on fuel and electrical energy will imply you pay much less.

It’s value giving correct meter readings when you’re not on a wise meter. This may imply you’re extra prone to have an correct direct debit on present use, somewhat than what you used final 12 months, and stops you from falling into debt in your power account. Your power agency will in all probability not change this mechanically, so that you may must ask.

Don’t overlook a direct debit does common the spend out over the 12 months so it’s best to hope to overpay in the summertime and underpay within the winter to assist even out your payments.

The power worth cap vs the power worth assure

In October 2022 a few government subsidies have been launched, which meant nobody was truly paying the cap. First, was a £400 low cost added to all fuel and electrical energy accounts, saving everybody £67 a month for six months, with the final cost hitting accounts in March.

Mixed with this was one other worth restrict referred to as the Vitality Worth Assure (EPG). The thought is that the federal government pays the distinction between the 2 charges if the EPG is decrease than the value cap.

Till July 2023 the EPG was £2,500 a 12 months (on common). It was then raised to £3,000.

On the similar time, the value cap fell to round £2,000, that means costs have been ruled by that decrease cap somewhat than the EPG.

How has the value cap modified?

As you’ll be able to see, the actually massive adjustments have occurred since October 2021. Earlier than this the common direct debit was underneath £100, so even with this new reduce, we’re nonetheless paying extra, and much more on prime when you had been saving with a decrease fastened charge deal.

These are the power worth caps going again to 2019, we’ve roughly adjusted them for the brand new typical use figures. You’ll be able to see the historic worth caps with the outdated figures below.

Historic power worth caps

These are the power worth caps from earlier than the standard use figures modified. This modification made it tough for us to check new caps with the outdated ones, so we’ve transformed the outdated worth caps into ones with the brand new typical figures above.