Households set to save on energy bills with price cap to drop from April
The significant reduction in the energy price cap could see average households saving £20 a month
The energy regulator has revealed a significant drop in the energy price cap for the second quarter of 2024 which could save households money on their bills.
Ofgem says the price cap will fall by 12.3% on the previous quarter from April 1st to 30th June.
For an average household paying by direct debit or dual fuel that equates to a drop of £238 over the course of a year, or a saving of around £20 a month.
Ofgem said the fall in the price cap would see energy charges reach the lowest level since Russia’s invasion of Ukraine in February 2022, which caused a spike in the wholesale market, driving up costs for suppliers and customers.
Ofgem chief executive Jonathan Brearley said: “This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis – but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.
“That’s why we are levelising standing charges to end the inequity of people with prepayment meters, many of whom are vulnerable and struggling, being charged more up-front for their energy than other customers.
“We also need to address the risk posed by stubbornly high levels of debt in the system, so we must introduce a temporary payment to help prevent an unsustainable situation leading to higher bills in the future. We’ll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which we’ll be announcing soon.
“These steps highlight the limitations of the current system – we can only move costs around – so we welcome news that the Government is opening the conversation on the future of price regulation, seeking views on how standard energy deals can be made more flexible so customers pay less if using electricity when prices are lower.
“But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall.
“As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”