Read your meters on March 31 – April Advice Column
You’ve probably seen on the news and social media that from April 2024 there is going to be a reduction in the OFGEM Price Cap gas and electricity, which will mean that prices on standard variable tariffs will drop by just over 12%.
What is the OFGEM Price Cap?
The price cap controls the maximum price an energy supplier can charge for each unit of energy you use, and takes into account any standing charges. Energy is measured in kilowatt hours (kWh) so from April, every kWh you use will be 12% cheaper than today.
What does this mean for you and your energy payments?
That depends on two things, your method of payment, and the tariff you currently have for your energy supply.
Pay by topping up?
If you are a prepayment customer, meaning you top up your electricity and gas as you use it, you are going to feel the benefit of that price reduction as soon as it happens. You should see your tops lasting longer.
Other payment methods:
If you pay by direct debit, have a payment plan or pay on receipt of bill, you won’t feel the benefit until your first bill that only has energy used after the 1st April, or until you have a direct debit review. However your energy will be 12% cheaper from April, you just have to wait a little longer to see that reflected in your bills or payments.
What is a tariff?
There are two types of tariffs variable tariffs and fixed tariffs:
Variable tariffs – for the last few years since the energy crisis started, the vast majority of people have been on a variable tariff. This tariff can go up and down depending on what the wholesale price of gas and electricity is, however it currently controlled by the OFGEM price cap.
Fixed tariffs – these are tariffs where you make an agreement with your supplier to pay a fixed price for each unit of energy you use, for a fixed period of time. These prices will usually be lower than the variable tariff, and won’t change, regardless of what is happening with wholesale prices. They usually have exit fees, so if you want to change supplier or tariff during the period of the fixed tariff, you may have to pay the exit fees.
There haven’t been many fixed price tariffs offered over the last few years, however suppliers are starting to make some available, and once the price drop happens, we are expecting suppliers to have more tariffs available.
Your energy supplier should always tell you on your bills or in your online account, if there is a cheaper tariff for you. If there is, always check the terms and conditions, especially for exit fees.
Some tariffs are tracking the OFGEM price cap, so if the prices come down, so will your tariff prices. But not all tariffs will do that, so please double check before signing up to anything.
If in doubt, contact the Energy Team at Citizens Advice who can help you find the best option for you.
And finally, take a meter reading late on 31 March 2024, so you can make sure your supplier charges you the new reduced rate from the right meter read, and not an estimated one.