Energy price cap drops again as energy costs become key election battleground

by | May 24, 2024

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  • Energy price cap will drop to £1,568 from July – a 7% fall for average bills 
  • Standing charges have remained at £334 a year 
  • Bills are still £430 a year higher than three years ago 
  • Labour and Conservatives are campaigning on energy bills 
  • Switching apathy has gripped the nation despite cheaper tariffs emerging 

Laura Suter, director of personal finance at AJ Bell, comments on the latest energy price cap

“The energy price cap has dropped to £1,568, meaning households will see another £122 come off the average annual bill from July. While the drop will be welcomed by households and means that a typical bill will fall to the lowest level in two years, bills are still more than £400 a year more expensive than three years ago. On top of that, an increase in the price cap is expected in October just as the nation heads into winter – so we can’t shelve high energy bills to the history books just yet.  

One worrying factor for those who are trying to cut costs is that standing charges haven’t reduced, despite the fall in the price cap. That means that even before you’ve used a unit of electricity or gas you’ll have to pay £6.42 a week just to be connected – or £334 a year.  

 
 

It looks like energy bills will be a key battleground in the election, with the Tories claiming that Labour’s net zero policies will pump up household energy bills, while Labour will claim they will help to protect the British public from future energy shocks like we’ve seen in the past few years after Russia’s invasion of Ukraine. Cutting costs for households coming out of a cost of living crisis is clearly a great campaign message – and one we’re likely to hear more on over the next six weeks from both parties. 

The return of a bit more normalcy to the energy markets means we’re also now out of the long period where it wasn’t worth fixing your energy deal. That means it’s worth weighing up what your energy provider is offering you and working out whether it might be cheaper than staying on the energy price cap. It’s not a simple answer though, and you’ll need to do some digging on what the price cap is likely to do over the next year and how much discount your energy provider is offering to work out if you’re getting a good deal.  

Despite the drops in prices, switching apathy has firmly gripped the nation. Considering a huge chunk of the population was sitting on the price cap back when markets were competitive and cheap deals were abundant, it’s unlikely we’ll see lots of people shift to a new tariff now it’s much harder to work out if you’re getting a good deal on your energy. The legacy of regulator-controlled pricing in the energy market during the past few years is likely to be even less switching from consumers, who have gotten so used to sitting on a price cap tariff.” 

 
 

How the price cap has changed

Month/year  Energy price cap  
1 July – 30 September 2024 £1,568 
1 April – 30 June 2024 £1,690 
1 January – 31 March 2024  £1,928 
1 October – 31 December 2023  £1,834 
1 July – 30 September 2023  £2,074 
1 April – 30 June 2023  £3,280 
1 January – 31 March 2023  £4,279 
1 October – 31 December 2022  £3,549 
1 April – 30 September 2022  £1,971 
1 October 2021 – 31 March 2022  £1,277 
1 April – 30 September 2021  £1,138 
1 October 2020 – 31 March 2021  £1,042 
Source: Ofgem. The values shown in the text above include VAT and are expressed for the current Typical Domestic Consumption Values (TDCV) of 2,900kWh of electricity, 12,000kWh of gas, and 4,200kWh of electricity for Economy 7. 

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