Energy bills slashed with Britons set to save hundreds of pounds a year
Published: 25/05/2023- 07:19
Updated: 25/05/2023- 08:42
Household energy bills are to be slashed in July as millions of Britons will see their bills drop by more than £400.
Ofgem is lowering its energy price cap from the current £3,280 per year to £2,074 for the average household in England, Wales and Scotland, effective from July 1, it has announced.
At its peak, the price cap reached £4,279 after Russia's invasion of Ukraine, which saw both oil and natural gas surge in price.
However, prices did not ever exceed £2,500 due to the Government’s Energy Price Guarantee (EPG).
Ofgem chief executive Jonathan Brearley says households 'could still struggle to pay bills'
July will see energy bills drop below the EPG, bringing the energy price cap back into effect.
It means the typical average household will see their annual bill drop by £426.
Despite energy bills looking set to fall, the cost of gas and electricity still remains far higher compared to a year and a half ago.
The regulator said: “Whilst today’s level is lower than last quarter, it is still above the levels it was before the energy crisis took hold, meaning many households could still struggle to pay bills.”
The cut to the cap marks the first time consumers on default tariffs have seen their prices fall since the global gas crisis took hold more than 18 months ago, Ofgem said.
Ofgem chief executive Jonathan Brearley said more focus will be needed for government, the regulator and the industry to support the most vulnerable groups this winter.
Brearley 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.
“However, we know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country. Where people are struggling, we urge them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds."
Despite energy bills looking set to fall, the cost of gas and electricity still remains far higher compared to a year and a half ago
The reason for the drop in the latest price cap is down to a reduction in wholesale gas costs, although wholesale prices are still a concern even as the market stabilises.
Martin Lewis, founder of MoneySavingExpert, said: “This will be a relief for many, yet most will still be paying more for their energy than during the winter.
“This is because, apart from for those with high use, the drop in the rates doesn’t make up for the £66 per month state support people got until April – and most are on monthly direct debit, which means they pay the same in summer as winter.
“Overall, this still leaves people paying double or more what they did before the energy crisis hit in October 2021.