Energy bills could be set to drop by more than £100 for the typical household from this summer.
The Ofgem price cap is currently set at £1,690 a year for a home with average gas and electricity usage. Analysts at Cornwall Insight now predict this to fall to £1,574 from this July, with an announcement expected from Ofgem this Friday (May 24).
But the Ofgem price cap does not set an actual limit on what you could pay for energy - instead, it sets a cap on the unit price of gas and electricity, as well as the maximum daily standing charge. The main headline figure is just used to demonstrate what someone with typical energy usage can expect to pay.
Ofgem estimates the average household consumes 2,700 kwh of electricity and 11,500 kWh of gas over 12 months. This means your bill may be more or less than the main figure, depending on how much gas and electricity you use. However, it is important to remember that energy bills are still far higher than what they used to be.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight: “Of course, we must recognise lower prices don't erase all the problems. The very fact we are still seeing bill levels which are hundreds of pounds above pre-crisis levels underscores the ongoing challenges faced by households.”
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Emily Seymour, Which? Energy Editor, said: "If you're on a variable tariff, then any reductions to the price cap will be automatically applied in July. If you are on a fixed deal and think you might be paying more than the new rates come the summer, then it's worth checking the exit fees to see if you can leave early if prices do fall below the cost of your fixed tariff. With prices falling and predicted to remain fairly stable for the rest of the year, more competitive fixed deals may become available in the coming months."
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