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Energy Price Cap in Great Britain to Hit Two-Year Low at £1,690 in April

February 24, 2024

Household energy bills are forecast to be hundreds of pounds a year lower than expected in the second half of this year, falling below the government’s £3,000 price guarantee after a sharp drop in wholesale prices.

Great news for households in Great Britain as the energy price cap is set to decrease to £1,690 starting from April, marking its lowest level in two years.

This reduction of £238 comes as a relief for millions of households, attributed to a combination of factors including a mild winter and decreased gas prices, according to the energy regulator Ofgem.

The energy price cap, which is determined by Ofgem, serves as a benchmark reflecting the average annual bill for 29 million households in England. This reduction represents a significant 12.3% decrease from the current quarter’s cap of £1,928.

In a move aimed at supporting the most vulnerable households, Ofgem has announced the equalization of standing charges, ensuring that customers with prepayment meters are no longer charged more for their connection compared to those on credit or direct debit.

The decrease in wholesale gas prices, attributed to a mild winter in Europe and ample supplies of liquified natural gas in Europe and Asia, has contributed to the decline in household bills. However, despite this reduction, the average household’s energy costs remain substantially higher than pre-crisis levels.

Despite the positive news of the price cap reduction, concerns remain regarding the persistence of fuel poverty, with an estimated 6 million households still impacted. The energy price cap will be subject to adjustment again in July, with expectations of further reductions before a subsequent rise in October.

Ofgem has also introduced measures to ensure adequate support for customers struggling with energy costs, including a temporary additional payment of £28 per year to suppliers. Additionally, the regulator has emphasized the need for a fairer and more resilient energy system, addressing issues of inequity and supporting vulnerable consumers.

Government officials have welcomed the decrease in the energy price cap, viewing it as a milestone. Plans are underway to examine standard energy deals to ensure the passing on of the cheapest electricity costs to consumers. However, concerns persist regarding the delayed implementation of a new plan for energy bill support, with advocacy groups urging action to alleviate the financial burden on households.

Overall, the decrease in the energy price cap offers a much-needed reprieve for households, with potential implications for inflation and monetary policy decisions in the coming months.