Energy bills to fall for millions of households this summer as price cap cut by £129 a year
ENERGY bills are set to fall by 7% in July, bringing much-needed relief to millions of households.
Ofgem, the energy regulator, has confirmed the new price cap, which comes into effect on July 1, 2025.
The average energy bill will drop from £1,849 to £1,720, saving a typical household about £129 a year, or roughly 7%.
The savings will 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.
Electricity will cost around 25.73p per kWh with a daily standing charge of 51.37p.
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Gas will be about 6.33p per kWh with a 29.82p standing charge.
The standing charge is a daily fee regardless of energy use, while kWh prices reflect what you pay for the energy you use.
The exact rates you will pay will vary depending on your location, as these are determined regionally.
Many might still pay more than Ofgem's headline figure because the cap limits the prices you pay not your total bill.
Ofgem's estimate assumes typical usage of 2,700 kWh of electricity and 11,500 kWh of gas per year.
Using more means a higher bill.
When does the price cap change?
OFGEM reviews the cap on unit rates for those on the default tariff every three months.
This means the energy price cap can move up or down at four different points in the year.
Price cap rates are updated on the following dates:
- January 1
- April 1
- July 1
- October 1
Tim Jarvis, director general of markets at Ofgem, said: "A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas.
"However, we're acutely aware that prices remain high, and some continue to struggle with the cost of energy."
Currently, the price cap sets annual energy costs at around £1,849.
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.
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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.
What energy bill help is available?
There's a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don't think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have schemes available to customers struggling to cover their bills.
But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don't need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill.
Some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you're struggling.
Get in touch with your energy firm to see if you can apply.