The energy price cap in Great Britain will fall 7% to the equivalent of £1,568 a year this summer after a drop in wholesale gas prices.
Set by the energy regulator, Ofgem, the cap reflects the average annual dual-fuel bill for 29m households and takes effect from July until the end of September.
The cap, which is set quarterly, will fall by £122 in July from its current level of £1,690, easing the pressure on household finances.
Although that represents a fillip for hard-pressed consumers, it still leaves bills far above the £1,154 cap in the summer of 2021, before the energy crisis. Wholesale gas prices began to rise sharply in 2021 and escalated after Russia’s full-scale invasion of Ukraine in early 2022.
Bills have since eased from their peak in 2023 – when the cap reached £4,279 but the government subsidised bills to keep them at £2,500 – but remain above pre-crisis levels, meaning millions of households are expected to remain in fuel poverty.
Jess Ralston, an energy analyst at the Energy and Climate Intelligence Unit, said: “Households are still struggling with bills that are hundreds of pounds higher than pre-crisis levels, and estimates suggest bills may rise again as we head into winter.
“Whatever colour the next government is, we’ll be heading into a winter still heavily dependent on volatile gas markets, going backwards on our energy independence. The cost of living, driven in part by energy bills, and the UK’s energy security may well be key election issues – so how the parties choose to tackle them will likely be in the spotlight.”
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The price cap is expected to rise slightly in October before falling again in January 2025, according to analysis by the consultancy Cornwall Insight. It had forecast July’s cap would be £1,574 a year.