As wholesale energy prices, particularly natural gas, continue to plummet, UK households are expected to benefit from a significant drop in the energy price cap.

Currently standing at £3,280, the cap is widely projected to fall below £2,100, offering the potential for lower energy bills.

ELN understands that this reduction in the cap could also have a profound impact on the energy market, fostering increased competition among suppliers and providing consumers with more options for energy switching.

The energy price cap serves as an annual cost limit for households with typical levels of consumption.

However, it is important to note that actual energy bills will still reflect the amount of energy used, even with the cap in place.

Interestingly, the current energy price cap holds little relevance to consumers’ bills as it exceeds the separate government Energy Price Guarantee, which restricts average annual bills to £2,500.

Nevertheless, should the energy price cap drop below this guarantee threshold, suppliers will be compelled to set their prices at or below the cap level.

Consequently, there is a strong possibility that starting in July, households will witness lower energy bills compared to the present scenario.

Another intriguing aspect is the potential emergence of increased competition among energy suppliers.

With wholesale prices experiencing a downward trend, suppliers may seize this opportunity to attract new customers by offering competitive tariffs and better deals.