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UK household energy bills are set to fall in the summer after energy regulator Ofgem said it would lower the price cap by 7 per cent following falling wholesale energy prices.
Ofgem has set the cap for the July to September period at a level that will see typical households pay £1,568 a year, 7 per cent lower than the current £1,690 a year.
It means typical bills will have fallen 21 per cent since July 2023, helping efforts to fight inflation. But they remain higher than before the energy crisis began, when the cap was typically below £1,100.
A surge in wholesale gas and electricity costs in late 2021 and 2022, spurred by Russia’s full-scale invasion of Ukraine in February 2022, sparked a cost of living crisis and soaring inflation. The UK government subsidised energy bills in response.
While that crisis has now eased and blanket government support has ended, campaigners have warned that millions of households are still struggling to pay their energy bills.
Cornwall Insight, the consultancy, said it expected the price cap to rise again in October, to £1,762 for a typical household. The price cap limits the unit costs that households pay, meaning that actual annual bills can be higher or lower depending on usage.
“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,” said Dame Clare Moriarty, chief executive of Citizens Advice.
“People cannot rely on lower energy prices alone to escape the financial issues they’ve been experiencing,” she added.
National Energy Action, the fuel poverty charity, said 5.6mn households would from July remain in fuel poverty, which it defines as spending 10 per cent or more of income on keeping the home warm.
“Every fall in the price cap is good news,” said Adam Scorer, the NEA’s chief executive. “But for our clients, and for millions of households in fuel poverty, there remains a huge gap between current prices and affordable energy bills.”
With Britain now in a general election campaign ahead of polling day on July 4, energy is set to become a major dividing line between the two main parties.
