Energy bills to fall by up to £426 for millions this summer as new price cap confirmed – what it means for you
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ENERGY bills are set to fall by up to £426 for millions of households this summer.
The energy regulator confirmed the new price cap, which comes into effect on July 1, this morning.
The Ofgem price cap has fallen by £1,206 from £3,280 to £2,074 a year and it will cover the period to October 1.
The lower cap will replace the government’s Energy Price Guarantee, which currently limits the typical household energy bill to £2,500.
It means the average household will see their annual bill drop by £426.
It marks the first time consumers on default tariffs have seen prices fall since the global gas crisis took hold more than 18 months ago, Ofgem said.
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Martin Lewis, founder of MoneySavingExpert, told BBC Radio 4’s Today programme that for every £100 you pay on energy now, you'll likely be paying £80-£85 from July.
While this may come as a welcome relief, campaigners have said bills in July will be comparable to those seen last winter.
This is because the government’s support schemes have come to an end.
Plus, bills are almost double the level of October 2021, when a typical household paid £1,271 a year.
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The price cap briefly reached £4,279 in January, with the pandemic and Russia’s war in Ukraine both pushing up wholesale prices.
Ofgem said that whilst today's level is lower, it is still "above the levels it was before the energy crisis took hold".
Its chief executive Jonathan Brearley said more focus will be needed for the government, regulator and industry to support the most vulnerable groups this winter.
He said: “After a difficult winter for consumers it is encouraging to see signs that the market is stabilising and prices are moving in the right direction.
"People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs."
Energy Security Secretary Grant Shapps described the drop as “positive”.
Households were shielded from the previous price cap by the Energy Price Guarantee.
The latter ends in July when the price cap falls.
The Government’s £400 winter discount to every household, paid in six instalments, also ended in March.
From October 2022 to March 2023, the government provided £67 a month for six months to subsidise energy bills.
National Energy Action says it means, in real terms, there is no reduction in bills.
It also warned that approximately 6.6million households will still be in fuel poverty.
Martin Lewis said a drop in the price cap is unlikely to make up for this support.
“Overall, this still leaves people paying double or more what they did before the energy crisis hit in October 2021," he added.
Citizens Advice chief executive Dame Clare Moriarty said that energy bills are still unaffordable for millions.
She said: "For many, life is getting worse, not better. Year on year we’re breaking records for the number of people struggling with energy debt.
“It’s clear more Government support will be needed in the future for struggling households."
Lower prices could mean people may be able to shop around and switch to a different supplier offering a better deal.
But Emily Seymour from consumer group Which? said that this might not be best for everyone because the market is still volatile.
She said: "We hope to see consumers back able to make some choices.
"However, it will depend on where energy prices go next."
For the four million households on pre-payment meters, prices will be the same as that for customers on direct debits from July 1.
Prepayment meters are disproportionately used by vulnerable and low-income customers. but they typically pay £45 extra a year for energy.
Can I get help with my energy bills?
Yes, energy suppliers do offer support for those who are struggling to pay their bills.
Those on Universal Credit and older legacy benefits are also entitled to cost of living payments worth up to £1,350.
There are plenty of energy grants and schemes open to help you out if you're struggling.
Ask your supplier what's on offer and how to apply, or check here:
There's a one-off fuel voucher from your energy supplier if you're on a prepayment meter.
Councils are also dishing out hundreds of pounds to hard-up families through the Household Support Fund.
If you're in debt there are plenty of services you can take advantage of and they offer free and friendly advice on how to manage debt.
Most of them can offer you free guidance and help in person, over the telephone or online.
- - 0800 138 7777
- - 0808 800 9060
- - 0800 138 1111
- - 0808 808 4000
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They can also help you take the next steps if you need a debt management plan (DMP) to tackle your debt or an Individual Voluntary Arrangement (IVA).
These are agreements for managing multiple debts.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]