Energy bills: Ofgem cuts price cap to £2,074 from July – business live

National Energy Action have calculated that there will still be 6.6 million households in fuel povert once the price of energy falls in July, under the new price cap, down from around 7.5m.

The charity points out that energy bills are still approximately almost double the level of October 2021.

And crucially, bills from July will be comparable to last winter as the Government has withdrawn support worth £400 to each household.

National Energy Action’s chief executive Adam Scorer says:

“Coming out of winter, most people will welcome any respite from record high prices, but it still leaves prices more than two-thirds higher than the start of the energy crisis and two million more households trapped in fuel poverty.

More than two and half million low income and vulnerable households are no longer receiving any government support for unaffordable bills. For them, the energy crisis is far from over.”

NEA also provide advice and support for those struggling – click here for more details.

Great Britain’s energy price cap has fallen to £2,074 a year, but the average household will still pay almost double the rate for their gas and electricity than before costs started to soar, our energy correspondent Jillian Ambrose reports.

Around 27m households can expect a modest drop in energy bills this summer after the regulator Ofgem lowered the cap on the typical annual dual-fuel tariff to reflect a steep drop in global energy prices over recent months.

From July, when the change takes effect, households will see their average gas and electricity bill fall from the £2,500 a year level set by the government’s energy price guarantee.

But households who struggled to pay their bills over the winter will feel little relief, because government top-ups worth £400 between October to March have come to an end.

The average energy bill will remain almost double the level seen in October 2021 – when Russia began restricting supplies of gas to Europe in a move that sent wholesale prices soaring. Before the energy crisis, the typical household paid £1,271 a year for gas and electricity.

Households could still face dual-fuel bills above £2,074 if they use more than the typical amount of energy because Ofgem’s cap limits the rate energy suppliers can charge for each unit of gas and electricity – not the total bill.

More here:

Q: Yesterday, energy firm SSE reported its profits have almost doubled in the last year (to an adjusted pre-tax profit of £2.18bn). Does that suggest the market might be rigged?

Ofgem CEO Jonathan Brearley points out that SSE don’t have a domestic retail business in the UK, so they don’t have the business that we’re regulating through the price cap.

He says there has been huge turbulence in the market with the cost of commodities internationally going up dramatically.

That came as Russia started withdrawing their gas from the market, and the whole of Europe making plans to move away from Russian gas.

That means the market is tighter and that does mean that prices are higher.

Brearley adds that the situation is starting to stabilise, and repeats that he hopes to see “competitive fixed price deals reenter the market”.

He concludes:

We have faced the biggest energy shock in our history. But things are improving.

Ofgem CEO Jonathan Brearley has warned that energy prices are unlikely to fall to their pre-crisis levels [in 2019, the cap was £1,254 per year].

Brearley says:

“After a difficult winter for consumers it is encouraging to see signs that the market is stabilising and prices are moving in the right direction. People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs.

“However, we know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country. Where people are struggling, we urge them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds.

“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups. In particular, we will continue to work with government to look at all options.”

Newsflash: Average energy bills will fall this summer.

Regulator Ofgem has just announced that Great Britain’s energy price cap will fall from July, to £2,074 a year for a typical household – a saving of over £400 per year.

The move means around 27m households can expect a modest drop in energy bills this summer. Ofgem is lowering the cap on the typical annual dual-fuel tariff to reflect a steep drop in global energy prices over recent months.

From July, when the change takes effect, households will see their average gas and electricity bill fall from the £2,500 a year level set by the government’s energy price guarantee.

But the average household will still pay almost double the rate for their gas and electricity than before costs started to soar.

Around 6.5m households will still be in fuel poverty, analysts estimate, even once bills fall in July.

At more than £2,000, typical energy bills will remain almost double the level they were at before Russia began restricting gas supplies to Europe as it prepared to invade Ukraine. In October 2021, the typical household paid £1,271 a year for gas and electricity, my colleague Jillian Ambrose explains.

In a forecast that will alarm hard-pressed families, Cornwall’s analysts have warned they do not expect bills to return to pre-2020 levels “before the end of the decade at the earliest”.

Peter Smith, a director of National Energy Action, a fuel poverty charity, said:

“It is good news energy prices are no longer spiralling but the energy crisis is far from over.”

More here:

Good morning.

The energy regulator is poised to announces a cut to household bills this summer, but UK households could little relief in the ongoing cost of living crisis.

Ofgem is expected to lower the energy price cap by several hundred pounds a year, when it is next adjusted in July. The announcement is due at 7am.

Analysts at consultancy Cornwall Insight predicts the price cap will fall to £2,054 a year for a typical household, following the drop in wholesale energy prices in recent months.

The cap, which was meant to protect consumers across Great Britain from rising prices, soared last year after the Ukraine invasion drove up oil and gas prices. This prompted the government to step in with its own energy price guarantee, effectively a lower cap than Ofgem’s.

Since April, the Ofgem cap has been set at an annual level of £3,280 for the average household on a dual-fuel tariff, which would be painfully high. But the government’s energy guarantee means average bills are lower, at £2,500 a year for a typical customer.

That EPG will rise to £3,000 from July – meaning the Ofgem cap (assuming it does fall today) will determine bills.

Importantly, the cap is on the unit charge of energy – NOT the maximum a household can be billed (which is still determined by how much energy they use).

And if the Ofgem cap does drop to around £2,000 per year, as expected, households will still be paying much more for energy than before the Ukraine war – even though European wholesale gas prices have hit 22-month lows in May.

Households which struggled to pay their bills over the winter will continue to be squeezed as government payments worth a total of £400 between October to March this year have come to an end.

Campaigners from the End Fuel Poverty Coalition have warned that households hoping for a sharp drop in their bills may find little difference compared with the rates they paid over winter.

Simon Francis, a coordinator at the coalition, said last week:

“People now face many more months with bills remaining stubbornly high. This will see them continue to use up their savings for everyday items, run up credit card bills, fall into debt with energy firms or turn to food banks as the cost of living crisis deepens.”

Although inflation did fall yesterday, prices continue to rise faster than economists expected, driven by essentials such as food.

The agenda

• 7am BST: Ofgem announcement on UK energy price cap

• 9.30am BST: Latest realtime UK economic data from the Office for National Statistics

• 11am BST: CBI distributive trades survey of UK retail sector

• 1.30pm BST: US weekly jobless claims figures

• 1.30pm BST: Chicago Fed national activity index