Energy price cap: How much will households save? Ofgem confirms bills will drop by 7% from July

Ofgem has confirmed that bills will drop by 7% from July. This means that the typical household energy bill will drop by £129 to £1,720 per year when the new energy cap come in.

This means that bills will be £660 (28%) cheaper than the height of the energy crisis in early 2023. However, the cap remains £152 (10%) higher than the same time last year.

Tim Jarvis, director general of markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.

“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.

“In the longer term, we need an energy system where prices are insulated from the volatile international gas market, and which ensures more stable prices and energy security. And we’re working closely with government to get the investment we need to reach our clean power and net zero targets as quickly as possible.

“We’re also doing everything we can to support consumers today and pushing ahead with more changes to help consumers. This includes working on ways to support those trapped in energy debt and bringing in reforms to standing charge tariffs for this winter.”

While the energy cap reduction will be welcomed by households, it comes at a time where other bills, including water bills, rise for millions. The rise in water bill was the biggest increase since February 1988, with rises in council tax and road tax also hitting UK residents.

Citizens Advice chief executive Clare Moriarty said: “This drop in energy prices will ease the burden of high bills for some households. But the Government must not lose perspective: bills will still be 52% higher than before the energy crisis and nearly seven million people live in households that have fallen behind on bills.

“Today’s announcement will be cold comfort to the millions paying off a mountain of debt on top of their monthly costs. The Government has said it hopes to provide more support to pensioners this winter but we know that people with children are often struggling most of all with energy. It must provide more targeted energy bill support to those hardest hit, and upgrade five million homes with money-saving energy efficiency measures.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, added: “The Government’s reverse ferret on Winter Fuel Payments are a clear sign that ministers know that people are struggling with energy bills – but sticking-plaster solutions and U-turns won’t help people in the long-term. While bills may fall slightly in July, they’re still significantly higher than before the energy crisis and remain tied to the unpredictable cost of fossil fuels. Without urgent reform and real investment, millions will continue to face unaffordable bills and cold homes.”