Ofgem, the UK’s energy regulator, has today announced that the price cap on energy bills will fall from July to £2,074 annually, a reduction of £1,206 from the April level of £3,280.
From 1 July, the energy price cap will be set at this level for a dual fuel household paying by direct debit, based on typical consumption, which reflects recent falls in wholesale energy prices. The new price cap represents both a reduction in last quarter’s cap, and also a reduction in how much households will pay on their bills.
Since October 2022, the Government has supported households through the Energy Price Guarantee, a £29.4 billion scheme which limits the amount billpayers can be charged per unit of gas or electricity by discounting the unit cost. The current price guarantee, set at £2,500, has meant that the Government has subsidised a significant amount of people's energy bills, saving families £1,500 on average, equivalent to between £150-£200 a month up to March 2023.
Whilst today’s announcement represents good news, with Ofgem lowering the price cap to £426 below the Energy Price Guarantee, the Government recognises that bills remain at historically high levels. That is why we will continue to support consumers in the short-term by maintaining the EPG at £2,500 until June 2023, (which will save the average household £160 for this period), and through additional support such as the £400 Energy Bill Support Scheme.
Looking to our long-term future, the Government is committed to delivering cheaper, cleaner, and more secure energy. The Energy Security Strategy sets out plans for how Britain will accelerate the deployment of wind, nuclear, solar and hydrogen power, while supporting the production of domestic oil and gas in the medium-term. Such moves will be central to weaning Britain off expensive fossil fuels from volatile foreign markets, and will boost our long-term energy independence, security, and prosperity.