Great news for households across the UK: a significant drop in energy bills is on the horizon. The energy regulator Ofgem is set to announce a sharp decrease in its price cap this Friday, paving the way for lower costs from July.
How Much Will You Save?
According to leading energy consultancy Cornwall Insight, the forecast is for a 7% reduction in the price cap. This translates to a direct saving of approximately £122 per year for the average household.
The new predicted cap will see the annual bill for a typical dual-fuel household paying by direct debit fall to £1,574. This is a welcome decrease from the current rate of £1,690 that has been in place since April.
The Catch: The Persistent Standing Charge
While the lower unit rate for gas and electricity is cause for celebration, the controversial daily standing charge remains stubbornly high. This fixed fee, which covers connection costs, is not affected by the price cap change.
This means households will still face a hefty daily cost just to be connected to the energy grid, before even using a single unit of power.
Why Is The Price Cap Falling?
The reduction is primarily driven by a stabilisation in the wholesale energy market. Wholesale prices for gas and electricity have fallen significantly since the extreme spikes witnessed during the Ukraine crisis, and these lower costs are now being passed on to consumers.
What Happens Next?
Ofgem will officially confirm the new price cap, which will cover the period from July to September 2024, this Friday, 24th May. Providers will then adjust their standard variable tariffs accordingly. This change affects approximately 29 million households in England, Scotland, and Wales.
While the drop provides much-needed relief, bills remain substantially higher than pre-pandemic levels, and experts continue to call for broader reforms to the energy market structure.
