Household energy bills are poised for a significant reduction, with predictions suggesting a drop of over £100 from the typical household’s expenses starting this summer.
Currently, the Ofgem price cap stands at £1,690 annually for an average consumption home. However, experts at Cornwall Insight forecast a decrease to £1,574 come July, with Ofgem expected to confirm this on the upcoming Friday (May 24).
It’s crucial to note that the Ofgem price cap doesn’t impose an absolute ceiling on energy costs but rather limits the unit rates for gas and electricity, alongside setting a maximum daily standing charge. The headline figure is indicative, representing the expected expenditure for a household with standard energy usage.
According to Ofgem’s calculations, the typical household uses about 2,700 kWh of electricity and 11,500 kWh of gas each year. Consequently, individual bills may vary from the headline figure, contingent on personal gas and electricity consumption levels.
Nonetheless, it’s vital to acknowledge that energy bills remain substantially higher than pre-crisis figures, reports the Mirror.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, cautions: “Of course, we must recognise lower prices don’t erase all the problems. The very fact we are still seeing bill levels which are hundreds of pounds above pre-crisis levels underscores the ongoing challenges faced by households.”
Which? Energy Editor, Emily Seymour, advised: “If you’re on a variable tariff, then any reductions to the price cap will be automatically applied in July. If you are on a fixed deal and think you might be paying more than the new rates come the summer, then it’s worth checking the exit fees to see if you can leave early if prices do fall below the cost of your fixed tariff.
“With prices falling and predicted to remain fairly stable for the rest of the year, more competitive fixed deals may become available in the coming months.”