Ofgem price cap news: Energy bills to fall as Martin Lewis reveals cheapest tariffs

Responding to the news that the price at which the average annual energy bill will be capped has fallen from £1,928 to £1,690, Mike Childs, head of policy at Friends of the Earth, said:

“When energy prices have been so obscenely inflated for such a long time, this announcement might seem like a good thing. But new analysis out today finds there’s a staggering 9.6 million households living in cold, health-threatening, heat-leaking homes which they can’t properly afford to heat given they’re on low incomes, as well as the high cost of food and housing. It’s going to take more than a minor retreat in energy prices to resolve the country’s deeply entrenched cold homes problem.

“Cold homes are also a huge blow to the UK economy through costs to the NHS, days taken off work sick from illnesses associated with cold homes, and reduced educational attainment. There is an urgent need for a bold plan to upgrade the UK’s heat-leaking homes. This would save households hundreds of pounds each year on their bills and significantly reduce the societal costs of cold homes - estimated to be in the tens of billions of pounds annually by the Michael Marmot Institute of Health Equity. Neither of the main political parties have yet developed a plan that comes anywhere close to tackling the scourge of cold homes.”

E.on Next - Next pledge

- Stays 3% LESS than every Cap (so moves with Price Cap)

- £50 dual-fuel exit fees

Money saving expert said E.on Next would be worth considering as it’s a variable tariff offering a fixed discount off the Price Cap for one year.

It stays £50 below the price cap.

British Gas Price Promise to new and existing customers

- 12% LESS (but guaranteed to be below the April Price Cap)

- £150 dual-fuel exit fees

The money-saving expert explained it’s a complicated tariff but could be worthwile as it is guaranteed to be at least £1 per fuel under April’s Price Cap.

Deals deemed ‘borderline’

Outfox the Market’s next pledge deal for new and existing customers

Octopus Energy loyal Octopus 12M Fixed Feb 2024 v1- for existing customers

Ovo Energy’s 1 Year Fixed & Boiler Cover- for new and existing customers with £150 dual-fee exit.

Money Saving Expert are advising households to consider a fixed deal if it is priced 17% less than the current January Price cap.

E.On Next’s Pledge tarriff promises to remain 3% lower than the price cap - so when the cap drops in April, so will the tariff, making it a worthwile option.

If consumers value certaintly over their monthly outgoings, British Gas Price Promise is around 12% cheaper than the current January cap and will drop to £1,688 a year for a typical dual-fuel user and remains fixed until June 2025.

Outfox the Market has a 12-month fix that’s 14% below the current Price Cap, and allows you to switch if a better deal comes along without paying an exit fee.

Octopus customers might wish to consider the Octopus Tracker tariff which rates change day-to-day according to wholesale costs, making it cheaper than the Price Cap in recent months.

The energy price cap is calculated based on wholesale energy prices. This is the amount energy providers pay for gas and electricity before supplying it to households – and it has begun to fall steadily in recent months.

Energy consultancy firm Cornwall Insight has gained a reputation in recent years for near-accurate predictions of coming energy price cap changes. They consider a range of factors, including wholesale energy prices and Ofgem’s own approach, to make their forecasts.

While the lowering of the energy price cap will come as welcome news to those struggling with their bills, it is still nearly £500 higher than when the cap was introduced in January 2019.

The energy price cap is the maximum amount energy suppliers can charge for each unit of energy for households on a standard variable tariff.

It is not the maximum amount you could be charged for energy in a year, nor a fixed rate. Rather, it is an indication of the average amount households can expected to pay if their energy consumption is ‘typical’.

In practice, the price cap corresponds to the maximum limit on what providers can charge per unit, either per kWh or as a daily standing charge. What you will actually pay will depend on where you live, how you pay your bill, and the type of meter you have.

The price cap was introduced by the government in 2019 to ensure energy bills accurately reflect the cost of energy. It is updated every three months.

The price cap sets a maximum daily standing charge - what you pay to have your home connected to the grid.

It also limits what providers can charge for each unit of gas and electricity- the more you use, the more you pay.

National disability charity Sense is warning that Ofgem’s recently announced energy price cap fall of an average of £238 will bring little relief to disabled households.

Richard Kramer, Chief Executive of the national disability charity Sense, said: “Rising costs have pushed over half of disabled households into debt; for these families, news that the energy price cap has fallen will bring little relief without more robust measures. Energy costs remain significantly higher than they were before the pandemic, yet disabled people are still waiting for long-term financial support.

“Despite the extra energy costs that disabled people face, this year the government shelved its plans to look into implementing a social energy tariff. Sense is urging the government to think again and ensure households who need energy for essential equipment like powered wheelchairs are put on an equal playing field.”

Martin Lewis has shared his top tip to beat the incoming energy price cap and save hundreds of pounds on gas and electric bills.

The Money Saving Expert founder explained how energy prices are predicted to drop by around 17 per cent this year and shared one fix that could get a person’s costs down even further.

It comes after regulator Ofgem introduced an energy price cap hike in the new year which saw the cap rise from £1,834 - the lowest figure since March 2022 - to £1,928 a year on 1 January.

The price cap is set four times a year, with the next adjustment set for 1 April.

Although some experts believe the cap will fall at the next review, Mr Lewis shared his “no brainer” trick to beat the price cap by three per cent in the meantime.

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Money expert Martin Lewis has revealed his five top tips for the cheapest energy tariffs after Ofgem announced the price cap drop on Friday.

Household energy bills have fallen to their lowest in two years, with the average duel-fuel household seeing a fall of £238 for the average dual-fuel household or around £20 a month over the course of a year.

Responding to the announcement, Mr Lewis unveiled five key points of information including tips on which is the cheapest way to pay, switching deals and how to undercut the price cap.

“The new rates for 1 April have just been announced. In a nutshell, for every £100 a Direct Debit user spends on energy today, they’ll pay £87.70 for it from 1 April,” he posted on X.

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Even after the energy price cap drop, bills still remain 60 per cent higher than they were before the energy bills crisis began, the End Fuel Poverty Coalition warned.

Simon Francis, co-ordinator of the organisation, added: “Three years of staggering energy bills have placed an unbearable strain on household finances up and down the country.

“Household energy debt is at record levels, millions of people are living in cold damp homes and children are suffering in mouldy conditions.

“Everybody can see what is happening in Britain’s broken energy system and it is time for politicians to unite to enact the measures needed to end fuel poverty. This includes cross-party consensus on a long-term plan to help all households upgrade their homes and short-term financial support for households most in need.”