Energy bills are set to see a decrease from July, with the energy price cap dropping by £506 compared to the previous year. The announcement was made by Ofgem, the regulator for the energy sector. This decrease in the cap will bring the average annual energy bill to £1,568, a 7% reduction.
However, despite this decrease, bills are still higher than they were before the energy price shock caused by Russia’s invasion of Ukraine in February 2022. In 2019, a standard 12-monthly bill was only £1,084. This means that compared to three years ago, energy costs have increased by an average of £484 for households.
From 1 April to 30 June, the energy price cap was set at £1,690 for a typical bill. Ofgem sets the cap four times a year, with the latest announcement applying from July to September. The recent decrease in the overall inflation rate, reported by the Office for National Statistics, can be partially attributed to the higher energy cap that came into effect in April.
However, despite the positive news of a decrease in energy bills, many households are still struggling to cover their essential costs and are in debt to energy providers. Citizens Advice chief executive Dame Clare Moriarty stated, “The fall in the energy price cap reduces bills slightly, but our data tells us millions have fallen into the red or are unable to cover their essential costs every month.” She also emphasized the need for targeted energy bill support for those who are struggling.
Unfortunately, it seems that this decrease in energy prices may only be temporary. Respected research firm Cornwall Insight predicts that bills will increase again in October, with a typical bill reaching £1,762 and remaining at this level until the end of March. This is due to the rise in wholesale gas costs, with concerns that Russia may halt gas flows to companies like OMV and US exports to Europe may be affected by a contractor filing for bankruptcy protection.
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