Energy Price Cap and Prepayment Meters

Last week (23 February) the energy regulator Ofgem announced the latest update the energy price cap - the amount an energy supplier can charge for each unit of electricity and gas.

Often described in terms of 'typical household' use (assuming that both electricity and gas are used and paid for by Direct Debit), the new price cap is £238 per year lower than for the previous period:

1 January - 31 March 2024 - typical use £1,928 (previous)

1 April - 30 June 2024 - typical use £1,690 (new)

While this recent reduction is welcome, energy prices are still extremely high compared to pre-energy crisis levels. Standing charges have also been increased and these disproportionately impact energy customers on lower incomes.

There is however some positive news for prepayment meter customers. A decision has been taken to 'levelise' standing charges between prepayment meter and Direct Debit customers. 

Prepayment customers are more likely to be disabled, chronically sick and on low incomes; and are at greatest risk of self-disconnection. This group have historically paid a higher rate compared to those on Direct Debit and so the decision to levelise charges is designed to ease the burden on this group. 

The move is not perfect as many Direct Debit customers also struggle with their energy bills, and the standing charges for Direct Debits has increased. But it is welcome that prepayment meter customers will now be treated more fairly under the price cap.

Full details on the price cap announcement can be found at: Changes to energy price cap between 1 April to 30 June 2024 | Ofgem

SFHA is engaging with Ofgem on the need for reforms to standing changes and will continue to call for wider reforms - including the introduction of a social tariff - to help protect tenants.