Energy price cap and household bills to fall to lowest in two years in April

The typical energy bill is to fall to £1,690 in April under the new price cap set by the regulator.

Energy bills will fall by £238 a year, or £20 a month this spring – the lowest price cap in two years – thanks to a mild winter bringing some relief to household bill payers.

The new cap is set by the regulator Ofgem, and will affect 29 million households in England, Wales and Scotland from April until June and is a 12.3% reduction from £1,928 in the current quarter.

The cap will be adjusted again in July and is expected to fall again to around £1,462 before rising to £1,521 from October, according to energy consultants Cornwall Insight.

Rules for Northern Ireland are different, but prices there are still falling. The cap does not limit how much customers will pay – those who use more will pay more.

The energy price cap is still higher than it was at pre-pandemic levels with households having to shell out more for their gas and electricity than they did before the energy crisis hit, after Russia’s full-scale invasion of Ukraine in February 2022.

The poorest households will see equalised standard charges, which is the fee paid before any gas or electricity is used.

This means customers with prepaid meters will no longer be charged more for their connection than those who pay by credit or direct debit.

It comes after pressure from fuel poverty campaigners, who say despite the move, bills are still high and many households will continue to struggle. 

Those with a meter will save £49 annually while those on direct debit will pay £10 a year more.

Analysts had feared that disruption to cargo ships in the Red Sea could push gas prices up further, but that has not happened so far.

As reported in The Guardian, Jonathan Brearley, the chief executive of Ofgem, said: “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 upfront for their energy than other customers.”

The regulator will add £28 to customer’s bill to ensure there are sufficient funds for suppliers and support customers who are struggling. 

Dame Clare Moriarty, the chief executive of Citizens Advice, said: “The government promised a new plan for energy bill support by April 2024 but will miss its own deadline.

“And the withdrawal of cost of living payments this spring will make it so much harder for many of those already finding it difficult to make ends meet. Without action, people will face a cycle of winter crises year after year.”

Energy firms will contact customers before April to inform them of their new price changes.