Drop in price cap to have little effect on winter energy bills – find out what to do if you're struggling

Ofgem has today announced that the energy price cap will fall from £3,280 to £2,074 on 1 July. The energy price cap limits the amount energy providers can charge.

But the term is a bit misleading as there’s no cap on the overall amount you pay, it’s a limit on the amount suppliers can charge for a unit of gas or electricity.

So the more you use, the more you’ll pay. The £2,074 figure reflects the amount an average household can expect to pay a year.

How much will I pay for gas and electricity from July?

Although the price cap has come down by over £1,000, the average household bill will only fall by £426.

This is because since October 2022, we haven’t been paying at the price cap level because of the government’s energy price guarantee (EPG). The EPG is a lower rate set by the government (currently £2,500). 

This means when prices go over the EPG, the state steps in and pays the difference between the EPG and the price cap.

Now the price cap has fallen below the EPG, we’ll pay at the energy price cap rate.

So will my bills be a lot less next winter?

Unfortunately not. The drop in price will be wiped out for most of us by the removal of the £400 of support (£66 a month) we all got last winter.

And lower users will be hit hardest, as that £400 of support represented a bigger percentage of their bill.

Most of us will still be paying about double what we did before the energy crisis started in autumn 2021.

And the government has suggested it’s highly unlikely to offer further support with bills, even for low earners.

Will standing charges go down too?

It will probably just be the cost of a unit of gas and electricity that will go down.

The price you pay just for the ability to use gas and electricity – the standing charge – is likely to stay at about £300 a year.

Again, this hits low users hardest as it represents a higher percentage of their bill.

I’m a non-smart prepay customer – when will the cheaper rate kick in for me?

You will usually pay the new rate from the day you top up.

With this in mind, you should aim to rundown your credit to the minimum by 1 July and then top up to activate the new cheaper rate. Even topping up by £1 will do the trick.

I’m struggling to pay my energy bills – what should I do?

The first thing you should do if you’re struggling to pay your energy bill is get in touch with your supplier.

Quite a few providers offer grants to help customers in need. Find out more in our guide on financial help from your energy supplier. 

And if you want to check whether you’re getting all the benefits you’re entitled to, why not try our free benefits calculator.

And if your income is no longer covering your bills, find out for free about the solutions available to help people struggling with debt. You may be surprised at just how much help is out there.