Sarah Pennells comments on the Ofgem price cap change

Published  23 February 2024
   2 min read

Commenting on the Ofgem price cap announced today, Sarah Pennells, Consumer Finance Expert at Royal London said:

"As expected, we’ve seen a drop in the price cap from Ofgem today that will come into effect from April 1st. The new cap of £1690 is £238 less for an average use household who pay their bills monthly by direct debit.

"Although much anticipated, and welcome news for many energy bill payers, it’s just a fraction of the amount by which household bills have risen since the start of the cost of living crisis. Falling prices are welcome but are not a miracle fix for those struggling with higher bills or in debt with their energy company.

"Our cost of living research* showed that 7% of energy bill payers were in arrears on their bill heading into winter. One in three of those hadn’t agreed how to repay their debts with their energy provider.  

"A year ago, the Government’s ‘Energy Price Guarantee’ limited the cost of energy bills to £3,000 for a typical household (not just for those on the standard tariff), so at first sight it looks like energy bills have almost halved, with the price cap levels announced today.

"However, it’s not a fair comparison because the ‘typical use’ figure fell last October, to reflect the fact that we’re using less energy on average. This is in part because people are using less heating due to the cost of living crisis, from fear of unaffordable bills or not having the money to top up their prepayment meters.

"If you’re in credit on your energy bill and pay by direct debit, you may be able to reduce your monthly payments. However, today’s announcement should also encourage anyone who hasn’t shopped around for a new energy deal for a while to have a look at what options are available and consider if now is the time to switch. This also includes people who locked into a fixed rate deal when prices were high, but which now looks expensive. However, fixed rate tariffs often come with exit fees, so anyone on one of these deals should factor the cost of those fees into any saving they could make.

"If you are in arrears on your energy bills, contact your energy company to put a plan in place to pay back the money you owe."

For more information on how to cut down your energy bills you can read our guide:

How to save money on your energy bills - Royal London

Notes to editor

*Royal London commissioned a survey by YouGov Plc.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 4222 adults. Fieldwork was undertaken between 25th August - 10th September 2023. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). 

For further information please contact:

Nicki Parry, PR Manager

About Royal London

Royal London is the largest mutual life, pensions and investment company in the UK, and in the top 30 mutuals globally, with assets under management of £162 billion, 8.6 million policies in force and over 4,200 employees. Figures quoted are as at 31 December 2023. Learn more at royallondon.com.