Details of the next energy price cap have been released, and it’s a welcome relief for millions of households. From July, the maximum unit price cap will decrease by 7 per cent, providing some financial respite over the summer months.
The price cap determines the maximum price that can be charged per unit of energy, not your total bill. The amount of energy you consume is in your control, so reducing usage or being more efficient with your gas and electricity can lower your bill.
Ofgem, the energy regulator, adjusts the energy price cap every three months based on the cost of power production. This 7 per cent reduction will come into effect from July and last until September, with details about the subsequent cap to be announced in due course. Regulator Ofgem says switching to a fixed deal could offer better value for many customers. Those currently on an existing fixed-rate deal will not immediately benefit from the drop but may already be paying a lower rate than the current cap.
For the average dual fuel household paying by direct debit, their annual energy bill will drop from £1,849 to £1,720 from July – a saving of £129, according to the Mirror. The price cap for those paying via pre-payment meter will decrease from £1,803 a year to £1,672, and the annual charge for those who pay upon receipt of the bill will reduce from £1,969 to £1,855.
Have your say! How have you coped under the latest period of high energy prices? Have you changed how you live in order to get through it? Comment below, and join in on the conversation.
Despite this positive news, it’s overshadowed by the previous three periods of escalating energy bills. The price cap rose by 10 per cent last October, 1.2 per cent in January this year, then 6.4 per cent last month.
Tim Jarvis, Director General of Markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas.
“However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy. The first thing I want to remind people is that you don’t have to pay the price cap.
“There are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.”
Have your say! How have you coped under the latest period of high energy prices? Have you changed how you live in order to get through it? Comment below, and join in on the conversation.