Ofgem has announced a drop in the energy price cap for the second quarter of 2024.
Effective from 1st April to 30th June, the price cap, which determines the maximum rate per unit for customers’ energy usage, will decrease by 12.3% compared to the previous quarter.
For the average household paying via direct debit for dual fuel, this means a cap of £1,690 annually, resulting in a £238 yearly reduction and approximately £20 in monthly savings.
This reduction brings energy prices to their lowest point since the turbulence caused by Russia’s invasion of Ukraine in February 2022.
The invasion exacerbated the already volatile wholesale energy market, driving up costs for suppliers and, consequently, for consumers.
Cornwall Insight consultancy had previously forecasted a 14% decrease in the energy price cap, bringing the average yearly bill down to £1,656.
Energy Security Secretary Claire Coutinho said: “My mission is to cut costs and get bills even lower so that families can spend their money on the things that matter most to them.
“Today we’re announcing further measures to slash bills for families and improve access to cheaper, flexible deals.”
Jonathan Brearley, Chief Executive Officer of Ofgem, said: “This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis – but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.
“That’s why we are levelising standing charges to end the inequity of people with prepayment meters, many of whom are vulnerable and struggling, being charged more up-front for their energy than other customers.
“We also need to address the risk posed by stubbornly high levels of debt in the system, so we must introduce a temporary payment to help prevent an unsustainable situation leading to higher
bills in the future. We’ll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which we’ll be announcing soon.
“These steps highlight the limitations of the current system – we can only move costs around – so we welcome news that the government is opening the conversation on the future of price regulation, seeking views on how standard energy deals can be made more flexible so customers pay less if using electricity when prices are lower.
“But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall. As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”
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