When is the new energy price cap and how much will it rise?

In June, consultancy Cornwall Insight released an updated forecast, predicting that the new energy price cap, which Ofgem is set to announce on 27th August, will likely be around £1,723 per year for a typical dual fuel consumer. This figure represents a significant 10% increase from the current cap of £1,568, which has been in effect since 1st July 2024. The new cap will apply from 1st October to 31st December 2024, setting a limit on both the cost per unit of gas and electricity and the maximum daily standing charge that energy suppliers can impose on customers.

The anticipated rise in the energy price cap is largely driven by an increase in wholesale market prices, which have been significantly impacted by ongoing geopolitical issues, particularly in regions critical to global energy supply. These geopolitical tensions, combined with existing supply-demand pressures, have resulted in higher energy procurement costs for suppliers, who are expected to pass these costs onto consumers through the new cap.

Moreover, the forecasted increase reflects broader concerns about energy affordability, as the higher cap will further strain household budgets already challenged by inflation and the rising cost of living. For the first quarter of 2025, experts anticipate that the cap will remain at a similar level to the projected October-December cap, indicating that elevated energy prices may persist into the new year. This projection underscores the volatility in the energy market and the potential for continued financial pressure on consumers as they navigate fluctuating energy costs.

With the new price cap announcement approaching, there is growing attention on how these changes will impact both residential and commercial energy users across the UK. As the market reacts to these developments, households may need to explore further energy-saving measures or consider fixed-rate energy tariffs to manage their costs more effectively. Meanwhile, the government and energy regulators face increased scrutiny to ensure that consumers are protected from the worst impacts of the rising energy prices, particularly as winter approaches.