Ofgem energy price cap: average household utility bills to drop from July as new price cap introduced

The Ofgem price cap will drop by £122, from £1,690 to £1,568, from July 1, 2024 in England, Scotland and Wales. The new price cap is £500 less than it was in July 2023, when it hit £2,074.

It comes amid a drop in wholesale price, but there are warnings that Ofgem could increase the cap again in October, before dropping it once more in January 2025. The price cap dose not indicate the limit of which people can pay for their gas and electricity, but provides an average figure for what households can expect.

Citizens Advice chief executive Dame Clare Moriarty said: “Today’s news will give small comfort to households still facing cost-of-living pressures. The fall in the energy price cap reduces bills slightly, but our data tells us millions have fallen into the red or are unable to cover their essential costs every month. People cannot rely on lower energy prices alone to escape the financial issues they’ve been experiencing. That’s why we need better targeted energy bill support for those really struggling to keep the lights on or cook a hot meal.”

Mike Thornton, chief executive of the Energy Saving Trust, said: “Today’s confirmation that energy prices are coming down for the next quarter is very welcome. However, no-one should take this lower price cap as a sign of stability.

“Forecasts show that energy prices are set to rise again this autumn and will be staying high overall for the next decade. After the election the incoming UK government must prioritise policies that support people to use less energy and install cost-effective energy efficiency improvements in their homes. This will be fundamental to bringing down energy bills, reducing carbon emissions and guaranteeing our energy security for the long term.”

Ofgem are in the process of reviewing its price cap and how it is calculated. Chief executive Johnathan Brearley told the Energy Security and Net Zero Committee on Wednesday (May 22) that prices “are still significantly higher than they were before, and when we look further out our best estimate is that prices are going to stay high and volatile over time”.

It comes after it was announced that inflation had dropped to 2.3%, almost hitting the Bank of England’s target of 2%. The new was welcomed by households, which have had to content with rapidly and consistently soaring prices over the past few years.

The lower inflation rate means that while prices may still rise, the jump won’t be quite as drastic as previously seen in stores. Experts said that the reduction in inflation was owed mainly to a significant drop in food prices, which is now at its lowest point in two years.