More energy misery as Ofgem announces 10% price cap hike


23 August 2024 – OFGEM STATEMENT

Every 3 months we review and set a level for how much an energy supplier can charge for each unit of energy and daily standing charge, under the price cap. 

From 1 October to 31 December the price for energy for a typical household who use electricity and gas and pay by Direct Debit will go up to £149 per year. This is an increase of 10% and adds around £12 per month to an average bill.

The new cap is 6% (£117) cheaper compared to the same period last year (£1,834).

You are covered by the energy price cap if you pay for your electricity and gas by either: 

  • standard credit (payment made when you get your electricity and gas bill) 
  • Direct Debit
  • prepayment meter
  • Economy 7 (E7) meter

The actual amount you pay will depend on how much energy your household uses, where you live and the type of meter you have.  

Energy price cap rates 1 October to 31 December

Electricity rates

If you are on a standard variable tariff (default tariff) and pay for your electricity by Direct Debit, you will pay on average 24.50 pence per kilowatt hour (kWh). The daily standing charge is 60.99 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.

Gas rates

If you are on a standard variable tariff (default tariff) and pay for your gas by Direct Debit, you will pay on average 6.24 pence per kilowatt hour (kWh). The daily standard charge is 31.66 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.

Costs included in the energy price cap

The level of the energy price cap is made up of different costs, for example the wholesale cost of gas and electricity, costs to supply energy on the network and VAT. These costs are split within the energy price cap between the unit rate and the standing charge.

Read about typical household energy use and how the energy price cap is calculated on our Average gas and electricity use explained page

View and compare 1 October to 31 December and 1 July to 30 September energy price cap standing charges and unit rates by region

You can also get and compare all the energy price cap (default tariff) levels

Review of standing charges

Last year we started a review of standing charges. Our call for input had feedback from more than 30,000 customers, consumer groups, charities and others.

Today we have published an options paper on our ways to reduce standing charges for households, called ‘domestic standing charges’. Standing charges are set by your energy supplier and are also included in the energy price cap. Your supplier will charge you this cost each day, even if you do not use any energy on that day. The charge covers the cost to maintain the energy supply network, take meter readings, and support government social and environmental schemes, like the Warm Home Discount scheme. 

View Understand your electricity and gas bill

The options in the paper could reduce the standing charge by between £20 and £100 per year by transferring parts of these fixed supplier costs to the unit rate (the price paid for every unit of energy used). 

We know that if these changes are made it could affect people who cannot safely reduce the amount of energy they use. This could be because of their dependence on life-saving medical equipment or living in a low standard of housing with poor insulation.

We are asking energy suppliers to offer energy tariffs that have no or low standing charges as well as their current tariffs. This will mean that energy efficient households will be able to choose a tariff that rewards them for using less energy. It will also mean that other energy customers can also choose from more tariffs that meet their needs.

You could pay less for your energy by changing your energy tariff. Find out if you can change your tariff and how to switch energy supplier.  

The options paper also sets out long-term considerations relating to the assignment of network costs, as a part of a broader review of how electricity and gas system costs are recovered from users.  

We would like to hear your views on standing charges. The discussion closes on 20 September 2024. Read our standing charges options paper and feedback your views using our online form.

Support for people with a prepayment meter

We have also extended our initial 12-month allowance to cover increased debt costs associated with additional support credit which we expect to be in place for at least another 6 months.   Additional support credit is often issued to people at risk of being cut off from their energy supply because they cannot afford to top up their meter. This decision means that the most vulnerable consumers will continue to be supported and have an energy supply this winter.

Next energy price cap review

We review and set a level on how much an energy supplier can charge for each unit of energy including the standing charge every 3 months. The levels for the period 1 January to 31 March 2025 will be published by 25 November 2024. 

Caroline Abrahams, Charity Director at Age UK said: “Means-testing Winter Fuel Payment (WFP)  when fuel prices are rising by 10% spells disaster for pensioners on low and modest incomes or living in vulnerable circumstances due to ill health.

“It means an estimated 2 million older people in all, will face an even steeper mountain to climb in paying their energy bills and staying warm and well when the weather chills. With pensioners also losing the cost-of-living payments they’ve received over the last two years we simply cannot see how some of them will cope.

“This latest bad news about the Energy Price Cap rising quite significantly makes it even more obvious that means testing WFP with virtually no notice & with no protections to safeguard vulnerable groups was the wrong policy choice and one that is potentially hazardous for some older people.”

“There’s scarcely any time to tackle the long-term under-claiming of Pension Credit – for more than a decade a third of pensioners who are entitled to it have consistently missed out. And the million or so older people whose small incomes take them just above the line to claim are horribly exposed – no take-up campaign can help them.” 

“Means-testing WFP in these circumstances this winter is reckless and wrong. The Government must think again.”

Age UK urges any older person living on a low income or struggling with their bills to contact Age UK’s free Advice line on 0800 169 65 65 without delay to check they’re receiving all the financial support available to them.

Alternatively, people can visit www.ageuk.org.uk/money or contact their local Age UK for further information and advice.

National Energy Action has responded: Just now, @Ofgem announced that #EnergyBills will rise 9% from October. NEA Chief Executive @adam_scorer says, ‘There is still time for @Ofgem and UK government to act for those at greatest risk, but without support.’

Energy regulator launches urgent investigation into British Gas forced prepayment meter installations

An Ofgem spokesperson said: “These are extremely serious allegations from The Times. We are launching an urgent investigation into British Gas and we won’t hesitate to take firm enforcement action.

“It is unacceptable for any supplier to impose forced installations on vulnerable customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so.

“We have launched a major market-wide review investigating the rapid growth in prepayment meter installations and potential breaches of licences driving it.

“We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable. The energy crisis is no excuse for unacceptable behaviour towards any customer, particularly those in vulnerable circumstances.”

FORCE-FITTING payment meters in the home of vulnerable people is “shocking” and unnecessary, according to a leading energy expert.

Energy UK’s former CEO Angela Knight was commenting on the results of an investigation by the Times newspaper which found that British Gas was forcing people to have pre-payment meters.

It found that debt collectors working for the firm were breaking into people’s homes to fit the meters.

Ms Knight told GB News: “I do think it’s a shocking story and I think it’s a wake up call not just to [British Gas owner] Centrica, but to all the energy companies.

“Firstly, there are people who say, I’m not going to pay, they can afford to pay, but they won’t pay…

“That’s what this process is supposed to be for, the process being that the energy company applies to the court for a court order in order to put in a pre-paid meter.

“So the individuals who say they won’t pay, but as I say, they can afford to, they are getting a pre-paid meter, so they’re not cut off.”

In a discussion with Bev Turner, she said: “But then, you’ve got a lot of people who fit into that vulnerable category and that’s people like the elderly, or people who are disabled, it’s those with very young children.

“And if they have hit a difficulty with being able to pay for their energy, and a lot of people are finding it difficult at the moment, then a pre-paid meter is not the answer. 

“They need to have an arrangement with their energy company and importantly, the energy company has a responsibility to find out first if somebody who isn’t paying falls into one of those special categories, and vulnerable categories.

“And if they do, then they shouldn’t be applying to the courts, what they should be doing is making another arrangement.”

Ms Knight added: “Now what Centrica said is they’ve stopped all of their applications right now and good on them.

“Clearly, they’re going to have to sort out the vulnerable from the not vulnerable, but they have not got a few months to do it, and then they can refresh how they approach this problem.

“And I think that what The Times’ sting has done, and what the Centrica announcement means, is that all other energy companies pay exactly the same amount of attention first, before applying for that court order.”

Commenting on the decision by Ofgem, which has ordered British Gas to stop force-fitting prepayment meters, the National Association of Property Buyers said:  “The sorry story of utility providers that was uncovered by The Times newspaper investigation highlights the potential injustices faced by many people in financial difficulty. 

“The NAPB welcomes the  fact that the company concerned has held their hands up and that Ofgem will be taking action to address the issue.

Spokesman Jonathan Rolande continued: “There is still a question to answer though. How, as a society do we deal with a situation where a householder has missed numerous payments and received letters and calls offering help, all to no avail?

“With heat, light and water being such basic human essentials, at what point are the companies allowed to disconnect? If allowed to continue unchallenged the lost revenue would inevitably be passed on to other paying customers – would that be fair? The providers are companies, should they carry the cost of unpaid bills alone?

“But the case in favour of the utility providers is seriously undermined by the huge profits made and massive salaries paid to executives – their pay is often counted in millions and there is no public sympathy for their cause.

“For now it is a relief that the intrusive practises of forced or tricked entry will be gone, but there are business and moral dilemmas for the companies, government and the public that will need to be addressed to ensure that the burden of unpaid bills doesn’t fall on those who are struggling but paying.”

Fuel poverty charity reveals 45 people per day die from cold homes

  • Last month, ONS releases figures showing 13,400 more deaths occurred in the winter period (December 2021 to March 2022) compared with the average of the non-winter months. 
  • Fuel poverty charity National Energy Action says that based on modelling by the World Health Organisation, cold homes caused 4,020 excess winter deaths last year in England and Wales. That’s 45 people per day in winter months. 
  • Despite the new figures being the second lowest for decades, the charity warns they only cover last winter, when energy bills were half the amount that they are now. 
  • The report coincides with the full publication of National Energy Action’s Fuel Poverty Monitor, which finds that households that have a low income and have a medical condition or use powered medical equipment at home are most at risk of the worst impacts of living in a cold home. 
  • They say these households have not been provided with adequate support during the Energy Crisis and are fearful next year’s winter mortality figures will be much worse.

The Office of National Statistics (ONS) has released figures showing there were 13,400 more deaths in England and Wales in the winter period (December 2021 to March 2022) compared with the average of the non-winter months.

Fuel poverty charity National Energy Action has said that up to 4,020 of these deaths were preventable and were caused by the impact of cold homes. That’s 45 people dying per day in the winter months last year – 42 in England and three in Wales. However, because of the time lag of the data, the true picture for this winter is likely to be much worse.

Last October 4.5 million UK homes were in fuel poverty, according to the charity’s figures, now – even with Government support, it’s 6.7 million UK households. The average annual bill has almost doubled in a year – from £1,271 to £2,500. The charity warns this means next year’s ONS figures are likely to be much worse.

Adam Scorer, chief executive of National Energy Action (NEA), said: “Every year we see the consequences of failing to keep the most vulnerable people safe and warm during the coldest, winter months.

“Today’s figures show a significant drop in premature winter deaths, partly because of a higher number of deaths outside winter months, but it’s still 45 people per day in the winter months. The truth is that we should not accept any death directly caused by a cold, unsafe home.

Next year, these statistics will expose the full impact of today’s energy crisis. The toxic combination of extraordinary heating costs, stagnant or falling incomes, and our notoriously poor, unhealthy housing stock will take a heavier toll with lives blighted by debt, ill health, and worse.  

“Milder weather may not save us, or thousands of vulnerable households this winter. We must do all we can now to prevent a public health emergency and further needless deaths. Fuel poverty needs long term solutions, but this winter we need the UK Government to give more support and stop millions falling through the cracks with the most awful consequences.”

The ONS figures cover the same period as National Energy Action’s Fuel Poverty Monitor, which is released in full on Thursday 19 January. The Executive Summary was released on Tuesday 17 January.

The Fuel Poverty Monitor shows that households falling into multiple intersecting categories of vulnerability are being disproportionately affected by the Energy Crisis.

While all low-income households are feeling a significant strain during the crisis, impacts go beyond those receiving means-tested benefits, and are felt most acutely by those households that have intersecting categories of vulnerability. These households are not caught by traditional identification measures and new ways of finding vulnerable households are required.

In particular, those households that have both a low income and have a medical condition or in need of powered medical equipment at home are most at risk of the worst impacts of living in a cold home. They have not been provided with adequate support.

Previous research has consistently demonstrated the links between cold homes and health conditions, especially musculoskeletal, cardiovascular, and respiratory conditions, as well as conditions related to mental ill health.

And, a recent systematic review of evidence from across the globe concluded that fuel poverty is associated with “poorer general health, poorer mental health, poorer respiratory health, more and worse controlled chronic conditions, higher mortality, higher use of health services and higher exposure to health risks, with worse results for vulnerable groups across dimensions of inequality.”

Moreover, cold homes are linked to the development and/or exacerbation of cold-related illnesses, especially in winter, and contribute directly to excess winter deaths, hospitalisations, and wider pressure on health and social care services.

Half a million households at risk of fuel poverty as prices soar

  • GB energy consumers face the biggest ever increase to the energy price cap
  • Fuel poverty charity National Energy Action (NEA) warns that the average increase of £153 for prepayment customers and £139 from those paying by direct debit using a default tariff is likely to result in more utility debt, 500,000 extra households in fuel poverty and an increase in preventable deaths this winter
  • Suppliers are putting their prices up in October when millions of people will see a reduction in their incomes, as uplifts to Universal Credit are withdrawn
  • Charity says new Household Support Fund welcome but not enough to prevent needless deaths this winter
  • Calls on UK Government to take more action to directly reduce higher prices for the poorest this winter and for Ofgem to do more to protect the most vulnerable consumers when suppliers fail.

Adam Scorer, Chief Executive at fuel poverty charity National Energy Action (NEA), said: “The massive devastating increases in energy prices will drive over 500,000 more households into fuel poverty, leaving them unable to heat or power their homes.

“Just when they were needed most, the uplifts to Universal Credit are also being withdrawn and inflation is soaring. The new Household Support Fund will provide some welcome support for those who can access it, but on its own it is not enough to halt the erosion in incomes and deal with rising prices.

“Without a wider package of support – keeping UC uplifts and more rebates to protect those on the lowest incomes from spiralling energy prices – vulnerable people are still at dire risk of premature death this winter”.

Falling through the gaps when suppliers fail”

NEA warns that the current crisis is likely to badly affect vulnerable customers when their suppliers fail. The charity is warning that households on older prepay meters are at risk of not being able to top up with their new supplier if their current supplier fails.

In addition, people in debt who transfer over to their new suppliers may also immediately risk aggressive debt recovery tactics from their previous suppliers’ administrators. People eligible for Warm Home Discount are also falling through the gaps when they move to their new supplier. They often can’t access all elements of this vital support.

Adam Scorer continued: “We know this situation is preventable, but Ofgem must act fast to protect the most vulnerable consumers when suppliers fail. The UK Government must also use the upcoming Budget to provide more additional emergency support so we can guard against the consequences of soaring bills and hits to millions of low incomes.

“This means enhancing current schemes and taking new steps to accelerate the repayment of utility debts across the UK”.

 “Many of those on the lowest incomes live in the least efficient homes”

NEA has also stressed that one of the key reasons the situation is bleak for the poorest households is the vicious overlap between the households who live on the lowest incomes and who also live in the least energy efficient homes.

They say in England alone, more than 680,000 households on the lowest incomes also live in the least efficient homes making the impact of the price rises much more severe. Over 3 million fuel poor households will need to be prioritised for retrofits if the goal to meet Net Zero is to be met at the same time as statutory fuel poverty targets.

Adam Scorer again: “These quick emergency fixes are vital to get struggling households through this winter, but we can’t lose sight of the long-term solution to reduce the energy waste in our homes.

“We have some of the least efficient housing in Europe. This has left the UK more exposed to the current soaring gas price than many other countries and we are wasting billions of pounds each year as heat escapes through leaky roofs, floors and ceilings”.

 What needs to be done

As a summary, NEA is proposing emergency provision to help fuel poor households to stay warm at home this winter, including:

  1. Providing additional funding towards the Warm Home Discount scheme this winter as an emergency provision to guard against significantly increased gas prices
  2. Supporting more households with the Winter Fuel Payment, especially for those eligible for the Cold Weather Payment in Northern Ireland
  3. Helping accelerate the repayment of utility debts across the UK by enhancing Fuel and Water Direct
  4. Continuing the Winter Grant Scheme through this winter

Additionally, through the Spending Review, NEA propose the following longer-term actions to ensure that fuel poor households can be warm at home for years to come:

  1. Fully implement the Conservative Manifesto for the Home Upgrade Grant Scheme (HUG) and Social Housing Decarbonisation Fund (SHDF)
  2. Ensure the Shared Prosperity Fund (SPF) helps end cold homes across the UK
  3. Extend and strengthen the £20 a week uplift in Universal Credit and Working Tax Credit for low-income households.