Energy bills were “dropping by over £100” within weeks

The average household energy bill will fall by a further 7% in July when the latest price cap change comes into force, experts say. Energy consultants Cornwall Insight said they expect a typical household’s energy bill to fall from £1,690 a year now to £1,574 on July 1.

This would be £500 less than the cap in July last year, when it was £2,074. But it is slightly higher than the £1,560 the group had previously predicted for July, while Cornwall added that it expected Ofgem to raise the energy price cap in October before lowering it again in January 2025 Ofgem will announce the energy price cap for July to September on 24 May.

Craig Lowrey, principal consultant at Cornwall Insight, said: “Our projections suggest that from July the average annual bill will fall by around £500 compared to last summer, providing further relief given the quarterly drop seen in April. Of course, we must recognize that lower prices do not erase all problems. The very fact that we are still seeing bill levels that are hundreds of pounds above pre-crisis levels underlines the ongoing challenges facing households.

Ofgem changes the price cap every three months based on a number of factors, the most important of which is the price of energy on the wholesale markets. 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 for a household with average use only.

Ofgem is currently examining the price cap and looking at how it is calculated. This includes thinking about changes to standing charges, which are fixed daily charges that cover the cost of power connections. Mr Lowrey warned of “trade-offs” from changes to the cap and said it was “vital” to find the right balance.

“The permanent tariff reduction, while it appears beneficial to low energy users, could lead to higher unit prices,” he said. “This could disproportionately impact those in less energy efficient homes or with higher energy needs, some of whom may be vulnerable.”