Millions of Brits are set to pay lower bills from July after Ofgem announced it would lower its price cap by seven per cent in response to falling wholesale prices.
The regulator announced it is dropping its price cap from the current £1,690 for a typical household in England, Scotland and Wales to £1,568, a drop of £122 over the course of a year.
The fall is around £500 less than the cap in July last year, when it was £2,074.
“Today’s news will give small comfort to households still facing cost-of-living pressures,” said Citizens Advice chief executive Dame Clare Moriarty.
“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.”
Ofgem tweaks the price cap every three months based on several factors, the most important of which is the price of energy on wholesale markets.
The latest fall will add further relief to households after the previous quarter-on-quarter drop in April, but analysts have said they expect Ofgem to increase the price cap in October, before dropping it again in January 2025.
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”.
Additional reporting by Josie Clarke – Press Association