Average household energy bills to fall by £122

24th May 2024 08:00

(Sharecast News) - Average household energy bills are set to fall by £122 this summer, it was confirmed on Friday, after the regulator lowered the price cap.

Announcing the price cap for the 1 July to 30 September period, Ofgem said typical bills would fall by just over 7%.

As a result, a typical household paying by Direct Debit will now pay £1,568 per year from July.

Customers who use more-than-average levels of electricity and gas, or who do not pay by Direct Debit, will pay more, however.

The price cap, introduced to stop energy providers making excessive profits, affects around 29m households in England, Wales and Scotland. A different system is in place in Northern Ireland.

It sets a maximum amount that suppliers can charge for each unit of gas and electricity, but not the total bill.

Energy bills soared after Russia invaded Ukraine, sending wholesale oil and gas prices to record highs. However, both prices and bills have fallen back in recent months, contributing to a fall in inflation rates.

Rabobank said of the latest price cap reduction: "Typical energy bills will fall by 7.2% in July. This will have a downward effect on the monthly consumer price index of around 45 basis points, but that month's base effect isn't as favourable as it was in April."