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Ofgem energy price cap announcement brings some good news at last – but is it enough?

LIC

It is the news we’ve all been eagerly awaiting, energy prices are finally set to go down from July after the new Ofgem energy price cap announcement. 

This morning, energy regulator Ofgem announced that the energy price cap will be dropping to an annual level of £2,074 for a dual-fuel household paying by direct debit based on typical consumption. This means that the new price cap will fall below the Government’s Energy Price Guarantee which caps the typical bill at £2,500.

The news is the first time since the energy crisis started that price drops will be passed on to customers on their supplier’s default tariff.

wooden dining table with white chairs in bright white dining room with gallery wall and radiators

(Image credit: Future PLC / Anna Stathaki)

‘After a difficult winter for consumers, it is encouraging to see signs that the market is stabilising and prices are moving in the right direction. People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs,’ Ofgem CEO Jonathan Brearley said in a statement.

However, while the news of energy bills dropping by £426 from July is welcome news, it still is not a return to pre-energy price crisis levels.

Ideal Home’s Money Editor Sarah Handley says: ‘A drop in energy prices will be welcomed after months and months of highest ever prices. But while the new cap is more than £400 cheaper than the price guarantee, prices are still much higher than they were before the energy crisis began. For families who are struggling to afford their energy bills, things will still be tough, so it’s really important to keep your energy use as low as possible to keep your bills under control.’

smart meter on kitchen shelf

(Image credit: Smart Energy GB)

Ofgem acknowledged in the quarterly announcement that the new energy price cap is by no means a sign that we’re out of crisis territory. ‘We know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country,’ Jonathan added. ‘Where people are struggling, we urge them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds.  

‘In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups.’

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