Energy bills to fall for millions of households this summer as price cap cut by £129 a year
GOOD ENERGY Energy bills to fall for millions of households this summer as price cap cut by £129 a year
ENERGY bills are set to drop this July, bringing much-needed relief to millions of households.
The energy regulator Ofgem has confirmed the new price cap, which comes into effect on July 1, 2025.
The average gas and electricity bill is set to drop from £1,849 to £1,720, saving the typical household £129 a year - around 7%.
But bear in mind the exact amount you pay can be higher or lower depending on your usage, and the cap is reviewed every three months.
This is significantly higher than the drop this time last year, when it decreased from £1,690 a year to £1,568.
The savings will still provide relief to millions, as over 22million households on standard variable tariffs are directly affected by the price cap, which is updated every three months.
Experts at Cornwall Insight had rightly predicted the energy price cap would drop to £1,720 in July.
Currently, the price cap sets annual energy costs at around £1,849.
However, many households may still pay more than Ofgem's headline figure.
This is because the price cap doesn't cap total bills but limits the maximum cost per kilowatt-hour (kWh) of gas and electricity, along with daily standing charges.
Ofgem's headline figure is based on the assumption that a typical household consumes 2,700 kWh of electricity and 11,500 kWh of gas annually.
So if you use more than a typical households expect to pay more.
What is the energy price cap?
However, energy experts say that households could make significant savings by switching to a fixed-rate energy deal now.
By choosing a fixed deal, customers can lock in consistent rates for a set period, potentially avoiding fluctuations in energy prices.
Of course, opting for a fixed energy deal carries the risk that, if energy prices drop further, you might end up paying more than you would on a variable tariff.
However, analysts have long said that households should not anticipate any significant drops in prices this year.
In response, National Energy Action Chief Executive Adam Scorer said: "Any fall in the price of energy is always welcome news, but this is a short fall from a great height. Bills remain punishingly high for low-income households.
"Four years of extraordinarily high energy bills has taken its toll. We hear heart-breaking cases every day.
"The likely expansion in eligibility for the Winter Fuel Payment will be a relief for some, but National Energy Action is calling for deeper energy bill support and a real focus to support households out of debt."
How do I calculate my energy bill?
BELOW we reveal how you can calculate your own energy bill.
To calculate how much you pay for your energy bill, you must find out your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.The standing charge is a daily charge that is paid 365 days of the year - irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details, you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type - this will give you your usage costs.
You'll then need to multiply each standing charge by 365 and add this figure to the totals for your usage - this will then give you your annual costs.
Divide this figure by 12, and you'll be able to determine how much you should expect to pay each month from April 1.
How can I find the cheapest fixed deals?
To find the best fixed energy deals, start by visiting price comparison websites, which aggregate various offers from different energy suppliers.
The best sites include Uswitch.com and MoneySavingExpert's Cheap Energy Club.
Enter your postcode and current energy usage details to receive a list of available deals tailored to your needs - it'll take you less than five minutes.
You'll then be able to compare the rates, contract lengths, and any additional features or benefits offered by each deal.
Next, visit the websites of individual energy suppliers to check if they have exclusive deals that are not listed on comparison sites.
Sometimes, suppliers offer special promotions or discounts directly to customers.
Compare these offers with those on the comparison websites to ensure you get the best possible rate.
Finally, consider customer service reviews and the overall reputation of the suppliers.
Once you have identified the best deal, follow the instructions to switch your energy provider.
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