UK energy bills to fall in summer as energy regulator cuts price cap

LONDON

UK energy customers will pay about 17% less for their bills from the summer onwards, as energy regulator Ofgem reduced its price cap by around 37%.

Ofgem announced its quarterly update to the energy price cap for between July and September this year, setting it at £2,074 annually for dual fuel households paying by direct debit based on typical consumption.

This price level reflects recent falls in wholesale energy prices, Ofgem said.

The price cap for the April to June period this year was £3,280, when customers paid an average of £2,500 for their energy bills.

"The new price cap represents both a reduction in last quarter’s cap and also a reduction in how much customers will pay their bills. Since October 2022, consumers have been supported by the Government’s Energy Price Guarantee, which caps the typical bill at £2,500," Ofgem said.

Prices are falling for customers on default tariffs for the first time since the global gas crisis took hold more than 18 months ago.

The price cap had reached £4,279 at its peak, and despite lower levels today, it is still above the levels it was at before the energy crisis.

"After a difficult winter for consumers, it is encouraging to see signs that the market is stabilizing 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," Ofgem CEO Jonathan Brearley said in a statement.

"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," Brearley said.

Energy Security Secretary Grant Shapps said the government stepped up to pay around half a typical energy bill, saving families £1,500 on average.

"And now bills are set to fall further, with Ofgem lowering the price cap by £426. There is more work to do, but today’s news marks real progress as we prioritize halving inflation," he said.

Inflation in the UK dropped to 8.7% in April, down from the 10.1% level in March. However, it still exceeded forecasts.

The UK government targets halving inflation and reducing it to 2%.

Ofgem CEO Brearley also conceded that it is unlikely to see prices return to levels before the energy crisis in the medium term.