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Fuel Bank Foundation Comments on April Price Cap

February 23, 2024

Commenting on today's energy price cap announcement from Ofgem, Matthew Cole, head of Fuel Bank Foundation, said:

“The price cap is continuing to move in the right direction but these are still difficult and worrying times for millions of vulnerable and low-income households.”

“From April, the average dual fuel household paying by direct debit will pay £1,690 – a fall of £238. For households that prepay for energy, the price cap will be £1,643. Prepayment meter users have always had the thin end of the wedge when it comes to fuel costs, generally paying more than direct debit customers, so the fact it is now lower is very welcome news. However, bills are still around 50 per cent more than they were before the energy crisis, so there’s still some way to go to get back to ‘normal’ levels. Until then, millions of households will continue to struggle to pay for the energy they need in their homes.”

This winter, for example, if the price cap remains at the same or similar level, customers with a prepayment meter will be paying more than £200 a month to keep warm, which is considerably more than households that pay by direct debit, whose payments are smoothed out over the year.

“To heap further pressure on their already stretched finances, the Government’s cost of living payments and Household Support Fund are coming to an end. These payments provided a vital lifeline and without them many more homes will find themselves in financial stress.”

To help counteract the higher fuel costs in winter, prepayment customers should be topping up their meter more than is needed during the summer, when energy usage is lower, to build up a credit reserve. However, we know that’s just not possible for the millions of low-income households already struggling just to keep the lights on, let alone find extra money for making additional meter top-ups.

“Ofgem’s decision to level up standing charges for prepayment meter customers, meaning they won’t pay more than those who pay by direct debit, thus ending the longstanding ‘prepayment premium’, is a welcome move, but more still needs to be done.”

“This is why we are urging the Government to take immediate action by announcing a new package of energy bill support specifically for households in or at risk of being in fuel crisis, both now and in the future.”