Energy regulator Ofgem is about to announce a welcome decrease in household energy bills of approximately 7 per cent starting in July. Experts at Cornwall Insight are forecasting a drop in the typical bill by £129 to £1,720 annually when the next price cap comes into effect.
The price cap, which dictates the maximum price firms can charge per unit of energy, is purportedly set to reduce from the current £1,849 for an average household after three previous billing period hikes.
This expected reduction comes in the wake of US President Donald Trump’s tariff strategies that have seen gas and oil prices plummet dramatically.
Although this anticipated dip is somewhat smaller than the earlier projections of a 9 per cent fall, trade tensions easing in recent weeks may account for the slight discrepancy.
Cornwall Insight anticipates that following this reduced price cap, consumers can expect a “modest drop” in October and another comparable decline come January next year.
Households across the nation can breathe a sigh of relief with the upcoming decline in energy charges after enduring an “awful April” peppered with Ofgem’s last 6.4 per cent price cap hike and other bill increases.
On top of soaring energy costs, families have also been dealing with hefty water bill surges – the highest since at least February 1988 – plus significant rises in council tax, mobile and broadband fees, and even road tax.
These cumulative spikes in household bills have driven the Consumer Prices Index (CPI) inflation rate up to a steep 3.5 per cent in April from March’s 2.6 per cent, marking a peak since January 2024.
Craig Lowrey, principal consultant at Cornwall Insight, stated: “The fall in the price cap is a welcome development and will bring much-needed breathing space for households after a prolonged period of high energy costs.”
He added: “It’s a step in the right direction, but it should be taken in context.
“Prices are falling, but not by enough for the numerous households struggling under the weight of a cost-of-living crisis, and bills remain well above the levels seen at the start of the decade.
“As such, there remains a risk that energy will remain unaffordable for many.”
Ofgem adjusts the price cap every quarter, predominantly reflecting fluctuations in wholesale market energy costs.
The Government initiated the energy price cap in January 2019, designed to establish a ceiling on the rate energy suppliers can bill customers across England, Scotland, and Wales per kilowatt hour (kWh) of usage.
Whilst the cap doesn’t restrict overall bills, customers continue to pay based upon their actual energy consumption.
