Ofgem to announce energy price cap for January to March 2024

Ofgem's decision on the energy price cap for January to March 2024 was due on Thursday 23 November 2023, the day after the Chancellor's Autumn Statement¹. The Bevan Foundation, an independent Welsh think tank, set out what it expected in a piece published on 20 November 2023¹.

The foundation said energy prices were more than 50 per cent higher than in 2021/22, with gas at 7p per kWh and electricity at 27p per kWh in October to December 2023¹. On those rates, it said, a typical household using the same amount of energy as in previous years faced a bill of £1,923 a year, or around £37 a week¹. It criticised Ofgem's decision to lower its estimate of the typical household bill to £1,834 a year on the grounds that households had cut back on consumption, describing the change as "a sleight of hand"¹.

On the coming cap, the foundation cited Cornwall Insight's forecast that prices would rise by five per cent, to £1,931 using new consumption figures, from 1 January 2024, and that they would stay high for the rest of the year¹. It also reported forecasts of a steep increase in electricity standing charges from April 2024 following a review by Ofgem, which it said could leave households paying 61p a day, or £4.27 a week, before using any electricity¹.

The foundation said there was some help for pensioners through the Winter Fuel Allowance, as in previous years, but nothing for people of working age¹. It added that people in Wales face energy prices among the highest in the UK, particularly in north Wales, homes among the least energy efficient, and household incomes among the lowest¹. It said Wales produces nearly twice as much electricity (27.1 TWh) as it consumes (14 TWh)¹.

The foundation's figures on what households were paying before the announcement, and its forecasts for what the new cap would bring, are its own and Cornwall Insight's; Ofgem's decision itself had not been announced at the time of publication¹.

Why it matters for households

The energy price cap sets the limit on unit rates and standing charges for households on default tariffs, so the level announced for January to March 2024 determines what most people pay per unit of gas and electricity over that quarter. The foundation's figures put the typical annual bill at £1,923 before the change and, on Cornwall Insight's forecast, £1,931 from 1 January 2024 using new consumption figures¹. The £400 Energy Bills Support Scheme payment that reduced bills last winter has ended, so households do not receive that support this winter¹. Pensioner households continue to receive the Winter Fuel Allowance, while the foundation said there is no equivalent help for people of working age¹. Standing charges are separate from usage: the forecast rise from April 2024 would increase the fixed daily amount paid for an electricity supply regardless of how much is used¹.

What happens next

Ofgem's announcement on the cap for January to March 2024 was expected on 23 November 2023¹. The forecast increase in electricity standing charges, if confirmed, would take effect from April 2024 following Ofgem's review¹. The foundation noted that prices for the next quarter remained speculation until Ofgem announced its decision¹.