2024 gas and electricity prices
Since the introduction of Ofgem's energy price cap in January 2019, most suppliers have based energy prices of their standard variable rate tariffs on the unit rates capped by the price cap.
In September 2021, the price of wholesale energy rose to a point where it became untenable for suppliers to keep offering deals at the rates they had been. This meant that the prices of fixed energy deals soared to the point that most of them became much more expensive than the capped standard variable tariffs, even at the then price cap level of £1,277.
Until 31 December, the price cap is £1,717 per year for average use customers paying by Direct Debit. However, it will increase to £1,738 from 1 January to 31 March 2025.
What can I do about high energy prices?
If you're on an expensive standard variable tariff, you would usually just switch to a new supplier (or even another tariff with your current supplier) to get a better deal.
Deals are now starting to return to the market, so it's a good idea to run an energy comparison to see what's available (whether you decide to switch to a fixed deal or stay on a standard variable tariff).
Otherwise, the best option is to try and manage energy usage around the home in order to keep bills as low as possible. Uswitch's new mobile app can help. Find out more below.
I've never switched energy before - how does it work?
It's a simple process to switch energy supplier. Here's what you need to hand:
- Your postcode
- Your plan name.
That's it! We'll do the rest, including comparing top deals in your area, and providing savings figures, customer ratings, and the ability to filter by preferences including green plans and more.
For step-by-step instructions on how to switch energy suppliers after a price rise, read our dedicated guide about how to switch supplier for gas and electricity here.
Why are energy prices so volatile?
Several factors can cause suppliers' gas and electricity prices to go up or down.
Market forces can cause the wholesale price of gas to rise or fall which then has a knock-on effect on energy bills. This is why prices increased so dramatically throughout 2021 and 2022. However, wholesale gas prices aren't always the cause of energy price changes.
The energy price cap
In recent years, the most significant gas and electricity price rises and cuts have been in reaction to changes in Ofgem’s energy price cap, which is reviewed and updated four times a year. But how can a cap change the prices suppliers are allowed to charge?
The cap was first introduced in January 2019 and limits the amount that suppliers can charge for their default gas and electricity tariffs. However, because the cap was dictated by wholesale energy prices, customers have felt the brunt of suppliers' rising costs with their tariff prices increasing as a result.
Limited energy supply
Gas is pumped out of the ground and electricity is mostly generated using a mix of fossil fuels like oil, gas and coal. These are all natural supplies, which are costly to get hold of, and more importantly, in limited supply.
Despite there being a limited supply of fossil fuels, the technology to find and extract them has advanced significantly and has meant that there is no shortage of gas and electricity.
The limited supply of fossil fuels could impact gas and electricity prices if energy companies were looking very far ahead into the future, but in the short-to-medium term, supply should not be a factor.
Global conflicts
Wars in oil-rich countries and conflicts between countries over gas pipelines can impact wholesale prices. For example, wholesale gas prices in the UK have spiked when supplies in Ukraine, Iraq and Syria have been threatened in recent years.
For the most part, these spikes have been temporary, and the supply of gas and electricity has remained constant in the UK throughout these conflicts, so it isn’t the ultimate factor.
UK energy providers
There are some arguments that energy providers could afford to keep prices low but instead choose to maximise profits by raising prices. However, the industry regulator Ofgem aims to provide transparency in the way the sector prices its gas and electricity. Ofgem also aims to keep the market competitive to ensure that consumers get the fairest price possible. You can go to the Ofgem website to see how much profit suppliers make each year.
To some degree, all of the above arguments could have some impact on your energy prices, but consumers can take back control by switching. By comparing energy prices you can switch to a cheaper provider and ensure that energy gas and electricity suppliers have to stay competitive to retain their customers.
What makes energy cheaper?
Because energy suppliers have to keep the cost of their standard variable tariffs within the price cap, their prices can drop when the cap rate is reduced. This has happened several times since the introduction of the cap - where the price cap rate has fallen, suppliers have been forced to drop their energy prices too. It's important to remember though that the price cap only applies to suppliers' standard variable tariffs, with most fixed deals being much cheaper to start with.
Another element is competition. Energy suppliers need your custom to be profitable. If their customers leave because there's a cheaper energy provider or one with better service, then they lose out.
What is the gas and electricity prices forecast for 2024?
It's difficult to predict with any certainty but at the moment, gas and electricity prices are expected to increase throughout the winter of 2024 going into 2025. The market is still unpredictable so things could change, but the overall energy prices trend is upwards.
For more information, head to our energy market Q&A guide.
FAQs
Should I fix my energy prices?
Fixing is a great option if you want price certainty for the duration of your contract, but nobody can guarantee what will happen to energy prices in the next year or two. It may also be worth sticking with a standard variable tariff and keeping an eye on the market instead.
Why is electricity so expensive in the UK?
Unfortunately, the volatility of the energy market and the rise in price of wholesale gas has had a knock-on effect for the price of electricity. This is because the main method of electricity generation is gas-fired, so when it costs more to use the gas, it costs more to generate the electricity and those costs are then passed on to customers.
What is the energy price cap per kWh?
The "energy price cap per kWh" refers to the unit rates that are capped. From 1 October to 31 December, they're 6.24p per kWh for gas and 24.50p per kWh for electricity. However, these are only average figures and tend to vary slightly from region to region. To find your exact unit rates, look at your bill.
