Energy price cap: Ofgem announces that bills will fall 12.3% to £1,690 per year from April 1

In good news for energy customers, Ofgem has announced a 12.3% reduction of the energy price cap with a typical household in England, Scotland and Wales paying £1,690 per year for their utilities from April 1.

It marks a £690 drop from the peak of the price cap and is the lowest level since the invasion of Ukraine in February 2022. The invasion caused a huge spike in the wholesale market, which in turn meant higher costs for both suppliers and customers, with the cap remaining stubbornly high ever since.

The newest announcement has brought optimism that energy bills will begin to be more manageable for UK households. However, Ofgem chief executive Jonathan Brearley said that while there is optimism, there is still work to be done. He said: “This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis – but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers. That’s why we are levelising standing charges to end the inequity of people with prepayment meters, many of whom are vulnerable and struggling, being charged more up-front for their energy than other customers.

“We also need to address the risk posed by stubbornly high levels of debt in the system, so we must introduce a temporary payment to help prevent an unsustainable situation leading to higher bills in the future. We’ll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which we’ll be announcing soon."

Mr Brearley said that these steps "highlight the limitations of our current system", adding that possible government reform of price regulation within the industry was welcomed. He added: “But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall. As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”