Energy Price Cap Changes: What It Means for Lancashire Households

The energy price cap dropped to £1,568 per year for a typical dual-fuel household from July 2024, down 7% from the previous quarter’s £1,690. For the average Lancashire home paying by direct debit, that translates to roughly £131 per month on combined gas and electricity, compared to £141 previously. While any reduction is welcome after two years of high prices, bills remain around 40% higher than they were before the energy crisis began in late 2021. Here is what the cap change means in practice and what you can do about it.

The energy price cap is set by the energy regulator every quarter and applies to the maximum unit rates and standing charges that energy suppliers can charge on their default (standard variable) tariffs. It does not cap your total bill – if you use more energy, you pay more. Understanding how it works helps you make better decisions about your energy spending.

What the Cap Actually Caps

The price cap sets limits on two things for each fuel:

• Unit rate: The maximum price per kWh of energy you use. Currently around 22.36p for electricity and 5.48p for gas (from July 2024).
• Standing charge: The maximum daily fixed charge. Currently around 60.99p for electricity and 31.41p for gas.

The widely quoted annual figure (£1,568) is based on a “typical” household using 2,700kWh of electricity and 11,500kWh of gas per year. Your actual bill could be much higher or lower depending on your usage. A well-insulated flat in central Manchester might pay £900, while a large detached house in the Ribble Valley could pay £2,500 – both under the same price cap rates.

How This Affects Lancashire Specifically

Lancashire households tend to use more gas than the national average for several reasons. The housing stock is older (many pre-1920 terraces and cottages), insulation levels are lower, winter temperatures in the Pennine areas are colder, and a significant number of larger rural properties have high heat demand.

Government data suggests that homes in the North West use approximately 5-10% more gas than the national average. That means the “typical” price cap figure understates what many Lancashire households actually pay. If your gas usage is 14,000kWh rather than the assumed 11,500kWh, your actual annual gas bill at cap rates is closer to £870 rather than the quoted £768.

Properties off the gas grid in rural Lancashire (using oil, LPG or electric heating) are not directly affected by the gas price cap but face their own cost pressures. Oil prices have fluctuated significantly and are not subject to any cap at all.

What Happens Next

The cap is reviewed quarterly (January, April, July, October). the energy regulator bases it on wholesale energy costs, network charges and policy costs. Most energy analysts expect prices to remain broadly stable through late 2024, with modest increases possible in the winter quarters due to seasonal demand patterns.

The key factors that could push prices up or down include wholesale gas prices (still influenced by global supply and geopolitical events), the pace of renewable energy deployment (which reduces reliance on gas for electricity generation), and government policy decisions on how energy levies are funded.

Should You Fix or Stay on the Cap?

With the cap dropping and fixed deals now available at or below cap rates, this is a good time to consider your options:

Stay on the cap if: You believe prices will continue to fall. The cap adjusts quarterly, so you benefit from each reduction automatically. There is no exit fee and no commitment.

Fix if: You want certainty and protection against potential winter price increases. A 12-month fixed deal at or below the current cap rate locks you in for a year, even if the cap rises next quarter. Compare fixed deals using a comparison site – if they are priced below the current cap, they represent good value.

Our guide to the best energy tariffs for North West households compares the current options in detail.

What You Can Do to Reduce the Impact

Regardless of where the cap goes next, reducing your energy usage is the most reliable way to lower your bills. Based on what makes the biggest difference for Lancashire homes:

• Insulate: Loft insulation, cavity wall insulation and draught-proofing are the three most cost-effective measures. government energy efficiency schemes funding can cover the cost if you are on qualifying benefits.
• Upgrade your boiler controls: A smart thermostat with proper programming may save an estimated £80-£150 per year on a gas bill.
• Switch tariff: If you have not compared tariffs recently, you may be able to save an estimated £100-£300 by switching.
• Consider solar panels: The 0% VAT on solar installations makes the payback period shorter than ever. Generating your own electricity protects you from future electricity price rises.
• Check your benefits: If you are on a low income, check whether you qualify for the winter energy discount scheme (£150 off your electricity bill), winter fuel support payment, or government energy efficiency schemes-funded insulation.

Our comprehensive guides on government energy efficiency schemes eligibility, solar panel costs and energy-saving tips provide detailed guidance for each of these options.

Support for Vulnerable Households

If you are struggling to pay your energy bills, several sources of help are available to Lancashire residents:

• Contact your energy supplier – they have an obligation to offer payment plans and hardship funds
• Contact your local advisory service for free energy debt guidance
• Apply for the winter energy discount scheme through your supplier
• Contact your local council about energy support schemes and government energy efficiency scheme flexibility provisions referrals
• Check whether you qualify for the winter fuel support payment if you are of State Pension age

Does the price cap apply to fixed tariffs?

No. The price cap only applies to standard variable tariffs (also called default tariffs). If you are on a fixed tariff, your rates are set by your contract for the fixed period, regardless of what the cap does. Fixed rates can be higher or lower than the cap depending on when you signed up.

Does the price cap apply to prepayment meters?

Yes. Since July 2024, prepayment meter customers pay the same capped rates as direct debit customers. Previously, prepayment customers paid slightly more. This equalisation benefits many Lancashire households, particularly in areas with high proportions of prepayment meters like Burnley, Hyndburn and Pendle.

Why do my bills not match the cap figure?

The widely quoted cap figure (£1,568) is for a “typical” household using average amounts of gas and electricity. If your usage is higher than average (common in Lancashire due to older, less-insulated homes), your bill will be higher than the quoted figure even though you are paying the capped rates per unit. The cap limits the price per unit, not the total bill.