Energy bills cut by £129 from today but thousands warned of looming change
The first price cap cut for a year is due to come into effect on July 1, although households are being warned not to expect to see the saving fully reflected in their bills
The energy price cap is being cut from Tuesday
(Image: SWNS )
From Tuesday onwards millions of homes across the nation will experience a reduction in their energy bills, yet advocates warn that many may not notice the change. The Ofgem price cap is set to decrease by 7%, marking its first decline in a year, with the average annual energy cost dropping to £1,720 from July 1. This represents a tentative annual saving of £129 for an average household.
However, the relief is temporary, covering only the summer period when energy usage is lowest, and it is due to be reassessed in October. Charities have highlighted that average bills are about £580 higher per annum than in April 2021, prior to the escalation of prices following Russia's invasion of Ukraine, reports the Mirror.
Adam Scorer, head of National Energy Action, stated: "Bills remain punishingly high for low-income households, many of whom are still paying off debt accrued during the energy crisis." For our free daily briefing on the biggest issues facing the nation, sign up to the Wales Matters newsletter here .
Simon Francis, at the helm of the End Fuel Poverty Coalition, added: "Millions will be looking for cheaper energy deals, but too many will be locked out of the best tariffs due to broken or missing smart meters. This is creating a two-tier energy system that punishes households already struggling."
"Energy bills remain hundreds of pounds a year more than before the energy bills crisis, in part caused by structural problems in the UK's energy pricing system caused by the cost of electricity remaining closely linked to volatile global gas markets.
"Not only is this reliance on gas costing us money, but the geological reality is that the North Sea basin is dying and there are limited levels of gas for home heating left, the UK is simply running out of gas. This is also becoming a national security issue as Britain's dependence on foreign gas deepens."
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The price cap, which is reviewed every three months, relates to the unit rate charged rather than the overall bill. However, Ofgem has indicated that a standard customer receiving both gas and electricity from the same provider paid via direct debit will now incur annual bills of £1,720 instead of £1,849.
However, so called 'network charges' are set to rise as the price cap eases. The charges are currently make up 22% of a typical household bill and are set to go up from April next year, placing more upwards pressure on UK household finances.
Ofgem's draft determination on how much it will allow network operators to charge energy suppliers from April 1, 2026 to March 31, 2031 would push up network costs for British Gas, OVO, EDF, EON and Octopus household bills by £24 a year.
The regulator's chief executive, Jonathan Brearley, said: "Britain's reliance on imported gas has left us at the mercy of volatile international gas prices which during the energy crisis would have caused bills to rise as high as £4000 for an average household without government support.
"Even today the price cap can move up or down by hundreds of pounds with little we can do about it. This record investment will deliver a homegrown energy system that is better for Britain and better for customers. It will ensure the system has greater resilience against shocks from volatile gas prices we don't control.
"These 80 projects are a long-term insurance policy against threats to Britain's energy security and the instability of prices. By bringing online dozens of homegrown, renewable generation sites and modernising our energy system to the one we will need in the future we can boost growth and give ourselves more control over prices too.
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"Doing nothing is not an option and will cost consumers more - this is critical national infrastructure. The sooner we build the network we need, and invest to strengthen our resilience, the lower the cost for bill payers will be in the future."
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