Energy bills set to drop by a further £110 at start of July before rising again this Autumn

The average household energy bill is set to drop by another seven per cent from the start of July when the latest Ofgem price cap is applied, according to experts. Energy consultants Cornwall Insight said they expect the typical household’s energy bill to fall by £116 from the current £1,690 a year to £1,574 on July 1.

This would be £500 less than the cap in July last year, when it was £2,074. But it is slightly higher than the £1,560 the group previously predicted for July, while Cornwall added it expects Ofgem to increase the energy price cap in October, before dropping it again in January 2025.

Ofgem will announce the energy price cap for July to September on May 24. Craig Lowrey, principal consultant at Cornwall Insight, said: “Our projections suggest that from July, the average annual bill will fall by around £500 compared to last summer, offering further relief given the quarter-on-quarter drop seen in April.”

He added: “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.”

Ofgem changes the price cap every three months based on several factors, the most important of which is the price of energy on wholesale markets.

The price cap does not limit a household’s total bills, people still pay for each unit of gas and electricity they use - the figures provided are just for an average-use household. Ofgem is currently reviewing the price cap and looking at how it is calculated.

This includes mulling over changes to standing charges, which are fixed daily charges that cover the cost of supply connections.

Mr Lowrey cautioned over “trade-offs” from changes to the cap and said it was “crucial” to find the right balance. He said: “Reducing standing charges, while seemingly beneficial for low-energy users, could lead to higher unit prices.

“This could disproportionately impact those in less energy-efficient homes or with greater energy needs, some of whom could be vulnerable.”

Emily Seymour, Which? Energy Editor, said: "Many households will be relieved to hear energy bills are predicted to fall by seven per cent from July. 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. Consumers can use switching services to keep an eye out for the best deals available."

She added: "Even though bills have come down substantially over the past year, many consumers are still struggling and levels of energy debt remain extremely high. In the longer term, a properly targeted social tariff is desperately needed to ensure the most financially vulnerable are able to afford their energy bills."

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