Energy bills for millions of British households are set to fall this summer after Ofgem, the energy regulator for Great Britain, cut the price cap on gas and electricity charges by 7%. The typical annual dual-fuel bill will drop to £1,720 from July, a reduction of £129 compared to the current cap.
The decrease follows three consecutive quarterly increases and is driven by a sharp slump in European gas market prices. However, households will still pay about £600 more per year than before Russia's invasion of Ukraine three years ago. The cap limits the rate per unit of energy, not the total bill, so households using more than average may still face higher costs.
Ofgem also reduced the amount suppliers can charge to cover operating costs after a full review, accounting for 10% of the price drop. This move is unwelcome for suppliers but provides relief for households facing rising costs for broadband, water, and other services.
Tim Jarvis, Ofgem's director general of markets, encouraged consumers to shop around for better deals and noted that switching to direct debit or smart pay-as-you-go could save up to £136. He emphasised the need for a system insulated from volatile international gas markets to ensure stable prices and energy security.
The new cap may reignite debate over energy affordability. Official data shows a record 2.7% of direct debit payments for gas and electricity defaulted in April due to insufficient funds, and total energy debt reached a record £3.8bn last September. Prime Minister Keir Starmer has indicated a willingness to reconsider the income threshold for winter fuel payments after backlash over limiting support to the poorest households.
