Credit, Collections & Insolvency News
Energy regulator Ofgem has confirmed the energy price cap will fall by 7% from 1 July to 30 September 2024, compared to the previous quarter. For an average household paying by direct debit for dual fuel, this equates to £1,568, a drop of £122 over a year.
The average household paying by prepayment meter for dual fuel will pay £1,522 over a year. The average household paying for dual fuel by standard credit will pay £1,668 over a year.
The price cap set by Ofgem assumes a standing charge of £334 for a dual fuel customer (£369 for those who pay by standard credit). This is unchanged from the last price cap period.
Suppliers may offer a lower standing charge for their default tariffs under the price cap but to raise the unit rate above that assumed in Ofgem’s price cap, they need to demonstrate that the overall amount charged to consumers is at or below the total price cap. Ofgem says that energy suppliers are free to offer fixed tariffs with a different balance of standing charges and unit rates and many do so.
With more than a third (36 per cent) of callers to National Debtline struggling with energy arrears, the charity is warning that despite a further drop in price from July, millions of people will remain trapped in energy debt without urgent support. Steve Vaid, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, said “The modest fall in the energy price cap will provide some relief to households, yet energy arrears remain at record levels. Millions of people will remain trapped in energy debt without further support.
“Urgent action is needed to help struggling households. Tackling mounting energy arrears should be a priority for the next Government, through a Help to Repay Scheme to ensure people have access to a safe route out of energy debt.”
Alastair Douglas, CEO of TotallyMoney said “Any drop in the energy price cap is a good one. And the news that it’s falling by £122 over 12 months will be welcomed by the millions of households who are struggling to keep up. But it is concerning — and in some ways confusing — that prices remain considerably higher than before the crisis, and are expected to rise again before the end of the year.
“And with just six suppliers now dominating 70% of the market, there’s just not enough competition. Before the crisis, more than 50 energy companies were fighting for new customers, with an array of deals undercutting the cap.
“However, we are seeing some offers re-enter the market, and you could still save money. But what’s important is that you do the calculations first, and read the small print. The energy price cap is based on estimates, so your usage might be different, and if you try to leave early, you might incur early exit fees which can cost up to £300.
“When it was introduced, smart meter technology was meant to work for people, not against them. However, 10% of meters are faulty, and with energy firms slow to act, millions of households risk unwittingly racking up hundreds of pounds in bills — through no fault of their own. Over the next five weeks, political parties will be canvassing for votes — let’s just hope that whoever’s in charge after that does something to fix the broken energy sector.”
Gareth Kloet, Spokesperson for Go.Compare Energy said “For many people in the UK, the news that the price cap will fall on 1st July will be welcomed. The unit rate for gas in particular has fallen 9% which could mean a sizeable saving for many billpayers.
“It is a pity that there hasn’t been a decrease in standing charges for bill payers, as that would have been another welcomed saving. While there isn’t a lot you can do to change these as these are set by the energy company, you can control how much energy you consume and it’s this usage that will help you save on your bills.”