Millions of households to see energy bills drop by 17% from July

Millions of households to see energy bills drop by 17% from July

The energy regulator, Ofgem, has announced that it will be lowering the Energy Price Cap from £3,280 to £2,074 from 1 July to 30 September. This is a welcome relief for households, who have been struggling with rising energy prices in recent months.

However, it is important to note that the new cap is still at record highs, almost double pre-crisis levels. This means that households will still be paying significantly more for their energy than they were a few years ago.

The new cap is cheaper than the government’s Energy Price Guarantee (EPG), which currently takes the average typical bill to £2,500. The EPG will end on 30 June, so households will need to switch to a new tariff if they want to take advantage of the lower price cap.

To make sure you pay the new rate from 1 July, make sure you take a meter reading, ideally by midnight on 30 June. You can then give this reading to your energy supplier, who will then update your bill.

It is also worth noting that the new cap is only on the unit rate, not your entire bill. This means that how much you pay will still depend on your usage. However, the lower unit rate should mean that you pay less overall.

Overall, the lowering of the Energy Price Cap is a welcome relief for households. However, it is important to remember that prices are still at record highs, and so households will still be paying significantly more for their energy than they were a few years ago.

What will be the effect of the new Energy Price Cap?

The energy price cap will take effect from 1 July to 30 September 2023. The cap is set every three months, so a new rate will kick in from October.

The average typical bill for those on a dual tariff will be £2,074. However, this figure does not represent the maximum you will pay. It is based on average typical use.

The new direct debit unit rates for energy from July are as follows:

Electricity:

• 30p per kWh (previously 33.2p kWh)
• Standing charge: 53p per day

Gas:

• 8p per kWh (previously 10.3p kWh)
• Standing charge: 29p per day

Ofgem says these rates can vary by region.

Will we see the return of fixed energy tariffs?

The lower energy price cap has given hope that suppliers may start to offer fixed energy tariffs again. These have traditionally been a good way to keep your energy bill at affordable levels, but almost no suppliers currently offer them.

However, whether you should fix your energy tariff is open to debate. We do not know where energy prices will go this year. Forecasts from the analysts at Cornwall Insight suggest that it is likely to be set at around £1,960 for the final three months of 2023, and then £2,026 for the opening quarter of 2024. But these are just predictions at this stage.

What should you do?

If you are concerned about your energy bills, you should take a meter reading as soon as possible and give it to your energy supplier. This will ensure that you are billed for the correct amount of energy up to that date.

You should also shop around for a new tariff and keep an eye out for suppliers offering fixed energy tariffs, as these may be a good option for you if you are concerned about future price rises.

However, it is important to remember that fixed tariffs can be more expensive than variable tariffs in the long run. So, you should carefully consider your options before making a decision.

I hope this helps!

Reference: https://moneyweek.com/investments/commodities/energy/605916/ofgem-cuts-energy-price-cap