Energy bills to fall in July

The average household energy bill will fall by £426 a year from July after Ofgem dropped its price cap following tumbling wholesale prices.

The regulator announced it is cutting its price cap from £3,280 to £2,074 from July 1, marking the first time consumers on default tariffs have seen their prices fall since the global gas crisis took hold more than 18 months ago.

At its peak, the price cap reached £4,279 and, “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 regulator said.

Households have been partly shielded from the most recent rise in prices by the government’s Energy

Price Guarantee (EPG), which limited annual energy costs to £2,500 for the average household – subsidising Ofgem’s price cap.

Ofgem’s latest cut means its cap will again govern household bills, resulting in a reduction of £426 from £2,500 to £2,074 – a fall of about 17%.

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.

Mr 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.

“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups. In particular, we will continue to work with government to look at all options.”

Chancellor Jeremy Hunt said he was “willing to do what it takes” if energy bills rose for households again this autumn.

He added the government was not expecting a major increase in Ofgem’s energy price cap.

Mr Hunt said: “We are very aware of the pressures that families are facing, and we want to do what we can to support them.”