Energy Price Cap to rise to £1,928 in January 2024

Ofgem's energy price cap will increase to £1,928 for a typical household in January 2024, from £1,834 currently¹. The figure covers the first quarter of next year, January to March 2024, and is a 5.7% increase on the previous quarter². Consumer Scotland said the implication is that the typical household energy bill is on course to be around 60% higher in January than two years previously¹.

The cap limits what energy providers can charge consumers for a typical level of consumption, and the January figure follows a period in which it fell. Ofgem's cap reached £3,500 for a typical household in October 2022 and was projected to rise further in January 2023¹. The Energy Price Guarantee and the £400 discounts under the Energy Bill Support Scheme limited the typical annual bill to £2,100 in combination¹. The Energy Price Guarantee was a subsidy keeping the annual cost of energy for a household with average consumption at £2,500 for two years from October 2022³.

Consumer Scotland's survey, its fifth in 18 months, was carried out between 2 and 18 October 2023 with 1,589 respondents¹. It found 30% of households said they found it difficult to keep up with their energy bills, down from 35% a year earlier, which it said implies 750,000 households across Scotland¹. Some 33% said they were not managing well financially, down from 39% twelve months previously, while 67% said they were managing well, up six percentage points on the previous autumn¹. One third of households were cutting back on food shopping to afford energy bills, and 8% said they were in energy debt or arrears in October 2023¹. Energy debt in summer 2023 reached £2.6bn, its highest ever level, according to Ofgem¹.

Scope said disabled households spend 8% of their budget on energy compared with 6% for non-disabled households, an extra £12 a week or £634 a year². It said the poorest 20% of households face additional energy costs of £4.05 a week, and the second poorest 20% £5.80 a week, rising at 2023 prices to £4.70 and £6.70 respectively². Scope's Disability Price Tag 2023 research found disabled households need an extra £975 a month to achieve the same standard of living as non-disabled households².

Why it matters for households

The cap is a limit on unit rates and standing charges for a typical dual fuel household paying by direct debit, not a cap on the total bill, so households using more energy pay more. The January figure applies to the first quarter of 2024². Consumer Scotland noted that increases to the standing charge mean some households, typically those with relatively low energy use, will see higher bills this winter compared with the previous winter, and cited a Resolution Foundation estimate that around one third of households in England will see higher bills, with no reason to believe the figure in Scotland will be materially lower¹. It also said benefits were uprated in line with inflation in April 2023¹. Scope reported that 38% of disabled people it surveyed said they were not using heating when cold, compared with 25% of non-disabled adults, and that 20% were cutting back or stopping showering and bathing, compared with 8% of non-disabled adults².

What happens next

The Chancellor, Jeremy Hunt, did not announce further targeted energy bill support in the Autumn Statement, Consumer Scotland said¹. It said the price cap is set to rise again in January and that affordability challenges look set to worsen rather than improve in the short term¹.