Energy bills to fall by 7% from July

Households using a typical amount of gas and electricity will see their bills fall this summer.

Energy watchdog Ofgem has confirmed that its energy price cap will be reduced by 7% from July.

This means a household using a typical amount of gas and electricity will see their annual bill fall by £129 - or £11 a month.

Standing charges - the fixed fees customers pay to connect to the energy grid - will go down by around £19 per year on average. 

What is the energy price cap?

The energy price cap limits the maximum amount suppliers can charge per unit of gas and electricity. 

But it doesn’t cap your total bill - the amount you pay depends on how much energy you use.

The price cap applies to households on standard variable tariffs, which are the default tariffs for customers who haven’t switched to a fixed-rate deal. 

How is the price cap calculated?

Ofgem reviews and updates the price cap every three months based on several factors, including:

• wholesale energy costs
• network maintenance costs
• supplier operating expenses
• government policies and environmental obligations
• inflation

Ofgem has confirmed that a recent fall in wholesale prices is the main driver of this latest reduction.

Households encouraged to shop around

Tim Jarvis, director general of markets at Ofgem, described the fall in the price cap as “welcome news” for consumers.

However, he said it’s “acutely aware” that prices remain high and that many are still struggling with energy costs.

“The first thing I want to remind people is that you don’t have to pay the price cap,” he commented.

“There are better deals out there, so it’s important to shop around and talk to your existing supplier about the best deal they can offer you.”

Mr Jarvis added that changing your payment method to direct debit or smart pay as you go could save households up to £136.

What to do if you’re struggling with energy bills

If you’re finding it hard to keep up with your bills, speak to your supplier, as they might be able to offer help such as grants.

It’s also well worth checking to see what other support you might be eligible for.

Use our benefits calculator or get in touch to find out what you could claim.

And don’t forget to try our handy budget planner, so you can see where you could save money in your household and free up cash for vital expenses.