✔ The average household’s annual energy bill will be £2,074 from July
✔ This is £426 less than the current Energy Price Guarantee
✔ But zero government support means energy will cost as much as it did this winter
The energy price cap will fall by £426 from July, Ofgem has announced.
This means the average three-bedroom household will pay £2,074 per year, down from £2,500 under the government’s Energy Price Guarantee – which will rise to £3,000, and exist only as a failsafe.
However, the government has said there will be no more support to help people cope with energy bills that are still 82% higher than they were two years ago.
And standing charges for electricity and gas – which you can’t affect in any way, unlike energy usage – have stayed almost exactly the same.
What will happen to your energy bills in July?
The average UK household’s annual energy bill will drop to £2,074 from July to September.
This 17% fall will apply to dual fuel households that use direct debit, which is the most common way homes in the UK pay for their energy.
If you have a prepayment meter, the average bill will be slightly higher, at £2,077.
And if you pay by cash or cheque, your energy price cap will be £2,211, which is £137 more expensive than using direct debit.
The cap isn’t on your total bill amount, but on the unit rates for electricity and gas – that is, how much it costs to use a kilowatt of either type of energy.
There’s no limit on your overall payment total – so the more energy you use, the more you’ll pay.
What’s the cost of electricity in July?
Electricity will cost 30.11p per kWh in July, which is a 12% reduction in price.
Households have paid 34p per kWh for electricity, on average (though it differs slightly from region to region), since October 2022.
However, the standing charge for electricity is going up slightly, to 52.97p per day from 52.92p under the Energy Price Guarantee.
You can’t avoid paying a standing charge or reduce it by using less energy, so this lowers households’ ability to cut their own bills.
What’s the cost of gas in July?
Gas will cost 7.51p per kWh from July, which is a 27% drop.
Since October 2022, the average household has paid 10.3p per kWh for gas.
But again, the standing charge has risen, from 29.09p to 29.11p per day.
Why will your energy bills decrease?
Your energy bills will decrease because the price of wholesale gas and electricity has plummeted over the past nine months.
Since the markets peaked in August, the wholesale gas price has plummeted by 78%, while the wholesale electricity price has dropped by 71%.
It’s only taken this long to affect your bills because energy companies pay for their gas and electricity in bulk, in advance.
Therefore, your rates are mostly based on wholesale prices from about five months ago, with some predictions thrown in too.
Will there be further decreases this year?
Yes, there will be a further 5.5% decrease in energy bills in October, according to market researcher Cornwall Insight.
This would mean a £114 reduction in the average household’s annual energy bill.
Prices are set to fall again because the cost of wholesale energy has dropped in the past few months, though less dramatically than in the previous period.
And unfortunately, energy bill costs are expected to rise again in January 2024, by 3.4%.
Is there any more energy bill support available?
There is no more energy bill support currently available.
The Energy Bills Support Scheme, which gave £400 to every household in England, Scotland, and Wales, ended in March 2023.
And on 21 May, Environment Secretary Therese Coffey confirmed that the government wouldn’t give any more support to help people pay their energy bills.
Numerous campaign groups have called on the government to reverse this decision on the back of the energy price cap announcement.
Emily Fry, an economist at the Resolution Foundation think tank, said: “The case for developing more sustainable support with energy bills, such a social tariff for vulnerable households, remains strong.”
Activists have also urged the government to lower bills in the longer term by funding programmes that’ll make UK homes more energy-efficient and speed up the transition to green energy.
Friends of the Earth’s Sana Yusuf said: “Amid all this, energy firms are still posting record-breaking profits. The injustice is breath-taking. People shouldn’t have to wait 10 years before they can afford to pay for life’s basics.
“The government must not waste another summer that could be spent rolling out a street-by-street insulation programme.
“Not only will this bring down bills quickly and help to protect people from the cold, it’s vital to cut the emissions our homes produce if we’re to meet our climate goals.”
Britain Remade’s Sam Richards said: “Predictions that prices will remain sky high for years to come will no doubt be worrying for many people. The only way to rapidly bring bills down is to turbocharge the roll-out of clean secure sources of domestic energy.
“The Government should start by dropping its ban on new onshore wind farms in England – at the stroke of a pen unlocking the cheapest source of energy available. It’s simply mind-boggling that Ukraine, while it fights for its survival, has built more onshore wind capacity than England.”
Ofgem CEO Jonathan Brearley also appeared to urge the government to offer support, saying: “We believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups.”
Will there be any support next winter?
There aren’t any government grants that will help you from July to September, but next winter, you may be eligible to receive support.
The Cold Weather Payment pays households containing people on certain benefits £25 for each period of seven consecutive days where the temperature stays at 0°C or below between the start of November and the end of March.
You may also receive a discount on your energy bills with the Warm Home Discount Scheme. Over the 2022/23 winter, it cut £150 from qualifying households’ energy payments.
If you’re eligible, the Department for Work and Pensions will let you know in a letter before the end of the year.
If you don’t qualify for any grants but you’re struggling, please contact your local authority and see if it can help you.
Most energy suppliers also offer help to customers who are in energy debt, including British Gas, E.ON, EDF, Octopus, OVO, and Scottish Power.
