Energy price cap comes down with average household saving £11 a month

Households have been urged to send in meter readings ahead of the energy price cap falling by 7% on Tuesday.

The typical household bill for those who have still not signed up to a fixed tariff will drop by £129 to £1,720 per year when the regulator’s new price cap, which sets the limit on how much firms can charge customers per unit of energy, comes into force.

This is £660 (28%) lower than at the height of the energy crisis at the start of 2023, when the government implemented the energy price guarantee.

However, prices remain elevated, with the upcoming level £152 (10%) higher than the same period last year.

The price cap does not limit total bills because householders still pay for the amount of energy they consume.

While around 35% of domestic customers are now signed up to a fixed deal that they have actively sought out – and which is not governed by the price cap – approximately 22 million households in England, Wales, and Scotland are still on the energy price cap.

It is these households that should read their meter by the end of the month to make sure they benefit fully from lower energy prices from July 1.

Failing to do so leaves the risk of paying the higher pre-July 1 rate for energy used in the form of estimated bills.

Research for the comparison site Uswitch suggests that a fifth of households (20%) without smart meters have not submitted their meter readings in the last three months, and 6% have not done so for a whole year.

Uswitch calculated that homes on a standard price cap tariff with average usage are expected to spend £63 on energy in July compared with £113 in June, due to a combination of cheaper unit rates and lower usage over the summer.

It urged households to sign up to a fixed deal while prices remain competitive, and said there were 10 fixed deals available, which were cheaper than the July price cap – the cheapest offering savings of around £145 for the average household.

Minister for Energy Consumers, Miatta Fahnbulleh, said: ‘Working families will keep more money in their pockets this summer, with the average household’s monthly energy bill falling by £11. This will be a relief to billpayers across the country.

‘Those families are at the heart of our plans to bring down bills for good. The only way we can do that is by reducing our reliance on fossil fuels and making the UK a clean energy superpower, protecting consumers from the impact of events beyond our borders.

‘We are also taking action to make sure vulnerable households are protected from the rollercoaster of energy prices by expanding the £150 Warm Home Discount to 2.7 million more households, building an energy market that puts consumers first, and upgrading millions of homes so they are cheaper to heat.’

Uswitch energy spokesman Ben Gallizzi said: ‘Customers who don’t have a smart meter should submit their readings before or on Tuesday 1 July, so their supplier has an updated – and accurate – view of their account.

‘There’s a lot of uncertainty about global energy costs at the moment, which has led industry experts to predict a rise in energy bills and in the price cap this autumn.

‘But households can get ahead of this possible price hike by fixing at cheaper rates now. Currently, there is a range of fixed deals available that are around £145 cheaper than the July price cap for the average household.

‘If you can switch to a deal cheaper than the July price cap, now is a good time to make the change. We urge customers to run an energy comparison as soon as possible.’

Ofgem has also reminded households that they do not have to pay the price cap, saying ‘there are better deals out there’.

The fall in energy costs will come as a relief for households, who suffered through an ‘awful April’ of bill rises, including Ofgem’s last 6.4% price cap increase.

Under-pressure households have also been hit with the biggest increase to water bills since at least February 1988, alongside steep rises across bills for council tax, mobile and broadband tariffs, as well as road tax.

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