Ofgem has confirmed that its energy price cap will drop to £2,074 for 27 million households on direct debit default tariffs from July, down from the current £3,280. This represents a reduction of £426 for typical users, marking the first decrease in energy bills in two years.
The unit rate for electricity will fall from 50p per kilowatt hour (kWh) to 30p, and for gas from 13p to 8p. However, the standing charge remains at 53p for electricity and 29p for gas. Prepayment meter customers will also see their cap set at around £2,077 a year, aligning with direct debit rates for the first time.
Despite the drop, energy bills remain significantly higher than before the crisis. In February 2021, the cap was £1,042. Ofgem CEO Jonathan Brearley noted that while the market is stabilising, bills will still be “very expensive” for many, and the UK is unlikely to see pre-crisis prices return.
The End Fuel Poverty Coalition warned that customers are still paying roughly the same as last winter, urging the government to ramp up energy efficiency and reform pricing. Shadow climate secretary Ed Miliband blamed 13 years of Tory energy policy failure for the ongoing high costs.
Customers on standard variable tariffs will see their bills automatically reduce from July 1. The government’s Energy Price Guarantee, which capped bills at £2,500, ends with this change.
