Finally some good news for people’s budgets – energy prices are falling and in a meaningful way. From 1 July Ofgem’s energy price cap will drop to £2,074, more than £400 below the current government Energy Price Guarantee.
With the government’s cap rising to £3,000 from July many had feared another leap in energy costs, but the fall in wholesale prices means that average energy bills are now only slightly higher than they were in April last year. While the drop is welcome, we’re still paying double what we were in October 2020, before we saw the huge rise in wholesale prices amid a leap in demand post-lockdown and the impact of the war in Ukraine.
On top of that, we’re all no longer receiving the £400 off our bills that the government dished out over the winter. Ofgem has also signalled that it doesn’t expect a return to low energy bills any time soon.
Laura Suter, head of personal finance at AJ Bell, comments on the latest energy price cap: “The actual amount you pay for energy depends on your usage, but one worrying factor for those who are trying to cut costs is that standing charges haven’t been cut, despite the fall in the price cap. That means that even before you’ve used a unit of electricity or gas you’ll have to pay £5.74 a week just to be connected – or almost £300 a year.
“Customers hoping to benefit from lower direct debits for energy from July will likely need to get in touch with their suppliers, as there is no obligation for them to automatically cut your monthly payments to reflect the new lower price cap. Instead, customers should submit meter readings, assess whether they are in credit or debt with their supplier and then see if their direct debit can be cut. Most energy customers build up some credit with their supplier during the summer months to help pay for higher energy bills in winter, so it’s a good idea not to slash direct debits to a minimum.
“More than £2,000 a year just for the average energy bill is still a huge sum for many households to pay, and anyone who has fallen behind on their bills should contact their supplier to work out their options. If that feels too daunting, contacting a charity like Citizens Advice is a good first port of call to see if there’s extra benefits you can claim or support you’re entitled to.”
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