Energy payments fall by greater than £120 as worth cap tumbles by 7%
The average household energy bill for homes in Britain will fall by 7 per cent from July after Ofgem lowered its price cap in response to wholesale prices.
The regulator revealed today that the cap will fall from the current £1,690 for a typical dual fuel household in England, Scotland and Wales to £1,568.
This is a drop of £122 over the course of a year – and the total is around £500 less than the cap in July last year, when it was £2,074.
Ofgem said the average household on a prepayment meter for dual fuel would pay £1,522 over the course of a year, or £1,668 for those paying by standard credit.
The price cap ‘assumes’ a standing charge – the flat amount all households pay to have energy delivered to their homes – of £334 for a dual fuel customer and £369 for those who pay by standard credit, unchanged from the last price cap.
Prime Minister Rishi Sunak speaks at a distribution centre in Ilkeston in Derbyshire yesterday
The latest fall offers further relief to households given the previous quarter-on-quarter drop seen in April, but analysts have said they expect Ofgem to increase the price cap in October, before dropping it again in January 2025.
Ofgem changes the price cap every three months based on several factors, the most important of which is the price of energy on wholesale markets.
The price cap does not limit a household’s total bills, people still pay for each unit of gas and electricity they use – the figures provided are just for an average-use household.
On Wednesday, Ofgem chief executive Jonathan Brearley told the Energy Security and Net Zero Committee that prices ‘are still significantly higher than they were before, and when we look further out our best estimate is that prices are going to stay high and volatile over time’.
Mike Thornton, chief executive of the Energy Saving Trust, said: ‘Today’s confirmation that energy prices are coming down for the next quarter is very welcome.
‘However, no-one should take this lower price cap as a sign of stability.
‘Forecasts show that energy prices are set to rise again this autumn and will be staying high overall for the next decade.
‘After the election the incoming UK government must prioritise policies that support people to use less energy and install cost-effective energy efficiency improvements in their homes.
‘This will be fundamental to bringing down energy bills, reducing carbon emissions and guaranteeing our energy security for the long term.’
Ofgem is currently reviewing the price cap and looking at how it is calculated.
This includes mulling over changes to standing charges, which are fixed daily charges that cover the cost of supply connections.
Citizens Advice chief executive Dame Clare Moriarty said: ‘Today’s news will give small comfort to households still facing cost-of-living pressures.
‘The fall in the energy price cap reduces bills slightly, but our data tells us millions have fallen into the red or are unable to cover their essential costs every month.
‘People cannot rely on lower energy prices alone to escape the financial issues they’ve been experiencing.
‘That’s why we need better targeted energy bill support for those really struggling to keep the lights on or cook a hot meal.’
