Energy Bills to Fall: New Price Cap Announced

Energy bills to fall: New Price Cap Announced 

Typical household energy bills are to fall by around £425. Energy regulator Ofgem has lowered the energy price cap, meaning millions will pay less on their gas and electricity usage. 

From July 1st, the new price cap will stand at £2,074 – down from £3,280. However, due to the Government’s Energy Price Guarantee, household bills were capped at £2,500 for the average household. This protected households from paying too much, keeping bills as manageable as possible. 

The price cap reached a peak of £4,279 in 2022 following Russia’s invasion of Ukraine. This pushed up wholesale energy prices, leaving people with eye-watering bills. The new price cap is a welcome break for many – with most people’s bills to fall by around 17 per cent. 

The new price cap falling below that set out by the Energy Price Guarantee scheme has brought about hope that people may be able to start shopping around again for their energy, to find the best deal they can. It’s hoped competition will pick up in the markets, meaning companies will once again be able to offer new and varied tariffs. 

Ofgem CEO Jonathan Brearly said: 

“After a difficult winter for consumers it is encouraging to see signs that the market is stabilising 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.  

“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.” 

According to the BBC, around 29 million households will be affected by the new price cap. Dual dual households who pay by direct debit will see the cap set at £2,074. If you pay via a prepayment meter, the cap will be similar at just £2,077. However, if you by by cash, check or bank transfer every three months, the price cap will be higher, at £2,211 per year. 

Many charities are worried that the new price cap won’t bring much relief to those who have incurred debt as the result of extortionate prices. 

Anna Stevenson, senior welfare benefits specialist, at Turn2us said: 

“Any decrease in the punitive cost of energy is clearly welcome but the debt people have already incurred through no fault of their own will carry with them into next winter. For lowest income households this decrease won’t help enough. Bills will settle to being around almost double the cost before the pandemic and fuel poverty was unacceptably high even then. Government schemes are also coming to an end, but the crisis is not.” 

You can find out more about the new price cap on the Ofgem website. 

The post Energy Bills to Fall: New Price Cap Announced appeared first on MoneyMagpie.

Original source: https://www.moneymagpie.com/make-money/energy-bills-to-fall-new-price-cap-announced

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