Ofgem have announced that the Energy Price Cap will fall £426 a year from July 2023, taking the average annual for a dual fuel household on typical consumption to £2,074. This decrease comes after wholesale gas prices have fallen in recent months following record prices over the past 18 months.
While on the surface this decrease in the price cap seems like welcome news, consumers are unfortunately likely to feel little relief from the cost of living crisis. Here, we explore how the new price cap will impact your finances.
How will the price cap affect me?
Energy prices fall for the first time in 18 months
Let’s start with the good news: from July 2023 energy prices will fall for the first time in 18 months. With the price cap falling by £426 to £2,074 from July, Ofgem CEO Jonathan Brearley has said: ‘People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs.’
As food inflation continues to soar, this reduction in the energy price cap comes as some long-awaited positive news in the cost of living crisis and will hopefully signal some light at the end of the tunnel where soaring energy bills are concerned.
Energy bills still double 2021 levels
Despite this welcome reduction in the energy price cap, energy prices still remain double what they were in 2021. This, coupled with record levels of inflation especially on food items, means that households are still likely to face high energy prices.
While summer will hopefully provide some respite, Brits are likely to face another difficult, expensive winter ahead.
Government energy support comes to an end
Government support which paid UK households up to £400 to all UK households between October 2022 to March 2023 has now ended. The instalments paid over the 6 month period, helped to ease the burden of high energy bills for consumers over the winter months. While energy prices will now fall from July, the removal of this support coupled with still higher than usual energy prices, means consumers will feel little relief.
Help with energy bills
With many still expected to struggle with energy bills despite the falling price cap, it’s important to know that there is still help available.
If you are struggling with your energy bills, your first response should be to contact your provider. They can, and should, pull together a payment plan that you can afford and may be able to provide access to hardship funds.
If you are still struggling to meet your energy bills, or other household costs, there is help available. The Government’s Help For Households lists all of the support available for the cost of living in one convenient place.
Alternatively, if you have fallen behind with your energy bills you can seek online debt advice using our online debt advice tool. Or, you can search for Money Helper to get free and impartial debt advice.