Money Matters: What the price cap drop means for you

In this week’s Money Matters column, Wrekin’s Debt and Energy Manager Dan Bebbington explains what the new energy price cap means for you.

It’s been announced that the energy price cap will go down from the start of April, with bills expected to drop by hundreds of pounds a year for the typical household.

Ofgem, the industry regulator, has set the new price cap at £1,690 a year, down 12% from the current cap of £1,928 a year.

This is the lowest price cap since before the start of the energy crisis two years ago, and means that you should see your energy bills reduced by £238 a year, or just under £20 a month.

However this figure also only applies to people who pay by direct debit.

For homes with a pre-payment meter, the cap will be slightly lower, at £1,643, while the those who pay their bills on receipt will pay more – with the cap set at £1,796.

It’s also important to remember that is just the average bill for a household with and the amount you actually need to pay will vary depending on your usage.

We know bills are still too high for many people, but the reduction of around £20 a month is welcome – particularly as council tax and other household bills will rise for many people in April.

We hope to look forward to further reductions later in the year.

A new price cap is introduced every three months, and current predictions are that we can expect another drop in July, but a small increase in October.

Sadly we know a lot of people won't feel the benefit of the upcoming price cap reduction, as they are battling debt due to the increases over the last two years.

If you find yourself in debt or are struggling to pay your energy bills, there is help available.

A good place to start is to speak to your energy supplier. They may be able to help you with a grant to clear debt on your account, and can talk to you about any other support available.

If you have a pre-payment meter but can’t afford to top it up, you might be able to get a voucher from your local council or an energy advisor.

You can also seek free advice from a number of organisations, including the Marches Energy Agency, LEAP (Local Energy Advice Partners) and National Energy Action.

Wrekin Housing Group customers can also access our energy advice service.

27th February 2024