Ofgem has announced that it’s energy price cap has fallen from £3,280 to £2,074, as of July 1.
This will be welcome news for many as people are no longer benefitting from the £400 they were given off their energy bills, which gave everybody a discount of £66 or £67 over six months until the end of March.
However, the Government‘s Energy Price Guarantee is rising from £2,500 to £3,000 from July 1, leaving many confused as to whether bills will be going up or down.
So when will energy bills start to decrease? Let’s find out.
When could energy prices start to go down?
The energy price cap will fall to £2,074 for an average household from July 1, meaning that from then people should start to see a decrease in the amount they are paying each month.
However, it is important to note that the price cap is for a typical household, so if you use more energy than the average household your annual bills will be more than the £2,074 price cap and the same goes for if you use less.
The Energy Price Guarantee is going up from £2,500 to £3,000 from July 1.
The EPG was created by the government in October 2022 when Ofgem’s price cap was at £3,608.
The EPG acted as a cap on a cap, so that bill payers would only have to pay £2,500 a year for their energy, instead of the Ofgem rate.
However, since the price cap has now fallen below the EPG rate for the first time since October it will no longer apply to energy bills – so you don’t need to worry about the fact that it is rising.
Despite the fact that the price cap is set to fall, Money Saving Expert Martin Lewis has pointed out that, because Britons are no longer getting £66/£67 a month off bills, bill payers may not actually see a difference in their payments.
He said: ‘It is worth remembering in April everybody lost the [£400] Winter (Winter Sale is here) bill support so in practical terms, people aren’t going to be feeling any real benefit.
‘They are going to be paying the same as they were over Winter (Winter Sale is here).’
Moreover, although the price cap has now fallen to around £2000, this is still far higher than when the price cap was introduced in January 2019, when the typical annual household energy bills was £1,137.
Consultancy Group Cornwall Insights has predicted that household bills will remain high for years to come, stating: ‘Despite the cap falling from the sky-high prices of the past two years, the figure remains over £1,000 per year more than the price cap levels seen prior to the pandemic.
‘We do not currently expect bills to return to pre-2020 levels before the end of the decade at the earliest.’
On the new cap, Emily Seymour, Which? Energy Editor, said: ‘The news that the energy price cap will come down to £2,074 a year for the typical household from July is positive, but many will understandably be confused about what exactly this means for them and their monthly outgoings.
‘While the new price cap on variable tariff rates will see typical bills drop by around £500, energy bills will be almost double the amount they were before the energy crisis began and these prices will still be unaffordable for many households. If you are concerned about struggling to pay higher bills, there is help available. Speak to your energy provider about a payment plan you can afford and check to see if you qualify for any government schemes.
‘If prices start to stabilise, we may see some providers offering competitive fixed price energy deals for the first time in well over a year, so it will be worth doing a bit of research to see if there’s a deal that could be cost effective while also offering good customer service and low exit fees.’
MORE : Martin Lewis warns we may still be paying more for energy bills this Winter (Winter Sale is here)
MORE : Household energy bills to fall by £426 a year after Ofgem slashes price cap
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First appear at When will energy prices start to go down? 2023 date revealed