What is the Energy Price Cap? (Jan 2025 update)

Energy price caps were introduced by Ofgem in 2019. They limit the highest amount that an energy company is allowed to charge an average customer per unit, for the gas and electricity they use.

The aim is to make sure that the prices people pay for the energy they use are fair.

The energy price cap does not limit what you will pay in total. If you use more, you will pay more.

Understanding the Ofgem Energy Price Cap Regulations

Every three months, Ofgem reviews and updates the energy price cap regulations, in January, April, July and October.

The Ofgem energy price cap is based largely on wholesale energy prices and applies only to providers' standard and default tariffs, which the vast majority of households are now on.

Recent Changes in the Energy Price Cap (January 2025 Update)

The rate that people will pay based on the new cap varies by area. See the energy price cap standing charges and unit rates by region here.

However, from 1 January to 31 March 2025, the energy price cap is changing.

For a typical user paying by Direct Debit:

• The energy price cap is set at £1,738 per year. At an increase of 1.2% compared to the cap in the previous period. The unit rate will be 24.86 pence per kWh for electricity and 6.34 pence per kWh for gas. 
• The average daily standing charge will be 60.97 pence per day for electricity and 31.65 pence per day for gas.

For a typical user paying by cash or cheque:

• The energy price cap is set at be £1,851 per year. 
• Customers who pay by standard credit (cash or cheque) will pay an additional £113 compared to those who pay by Direct Debit.
• The unit rate will be 26.16 pence per kWh for electricity and 6.67 pence per kWh for gas.
• The average daily standing charge will be 67.05 pence per day for electricity and 36.31 pence per day for gas. 

For a typical user paying by prepayment user: 

• The energy price cap is set at £1,660 per year.  The unit rate will be 24.03p per kWh for electricity and 6.11p per kWh for gas.
• The average daily standing charge will be 60.97 pence per day for electricity and 31.65 pence per day for gas.

The changes to the energy price cap are largely due to fluctuations in the wholesale energy market. 

The next change is due in April 2025, the Price Cap will be reviewed shortly before this with the new prices for April being published on 25^th February 2025. 

The government previously subsidised prepayment customers through the Energy Price Guarantee, to ensure that they don’t pay any more than Direct Debit customers. This ended in March 2024 when the Price Cap changed to ensure pre-payment customers did not pay more than direct debit customers. Managing High Energy Bills Under the New Price Cap.

At Stay Energy Safe, we understand that changes to the energy price cap can make it more and more difficult to meet regular payments or to keep your meter topped up.

In the meantime, there are some alternatives that can help you with controlling and reducing energy bills:

• Talk to your energy supplier about having a prepayment meter – or ‘pay-as-you-go meter’ – installed in your property. It’s an effective way to manage budgets and the amount you spend on gas and electricity. It can also be used to build up credit during the summer months, for example, and other times you are using less energy.
• Smart meters – which can work in prepayment or credit mode – provide real-time insights into how much energy you are using. They can help you to discover habits that might be burning a hole in your wallet, so you can adjust those habits to save money. To learn more about the different meter types and what they can do for you click the link here.

Some people might consider tampering with their meter, stealing electricity and gas in an attempt to reduce energy bills. This is simply not an option. All it does is put you and your loved ones in serious danger. You can learn more about the dangers of energy theft here.

If you would like access to free advice on energy efficiency, reducing bills, safety tips, and 
services for vulnerable households, including home visits, financial guidance, and access to
local resources like food banks and debt advice, please visit our support page. 

Alternatively, contact your energy provider to see what options are available for you. Stay vigilant, to keep your household and community safe. If you suspect someone of energy theft, contact Stay Energy Safe immediately. Report it 100% anonymously on 0800 023 2777 or via our online form.