The UK’s energy regulator has announced a new price cap from April that will bring the typical annual energy bill down to £1,690 – a two-year low. The price cut of £238 per year for a household using an average amount of energy comes after suppliers paid lower wholesale prices. While the news will bring relief to consumers, campaigners argue that bills remain high and that many households will still struggle to keep up with payments.
Ofgem, which sets the maximum amount that suppliers may charge for each unit of gas and electricity, and addresses debt owed by customers to suppliers with a £28 annual charge, says energy prices have returned to their lowest point since Russia invaded Ukraine in 2022, causing a further spike in wholesale energy prices. As per Ofgem, the new price cap will be effective for 29 million households in Scotland, England and Wales, with different prices in Northern Ireland.
From April, the price of gas will be 6p per kilowatt hour (kWh) and electricity 24p per kWh. Households on prepayment meters will be charged the same as those on direct debit, while those who pay every three months by cheque or cash will pay more. At the same time, standing charges covering the costs of connecting to a house’s energy supply have increased to 31p per day for gas and 60p per day for electricity. However, charges can vary depending on the area.
Jonathan Brearley, chief executive of Ofgem, argued that despite the reduction, standing charges’ fixed daily amount, which covers the cost of connecting to the supply, remains an issue. Some critics think that these charges are pushed up, and some have called for them to be abolished. As per Ofgem, the analysis conducted shows that a significant group would be made significantly worse off by abolishing them.
Ultimately, while lower energy prices will provide some relief to households, high bills continue to impact many families, and the regulator has already indicated that it still needs to address fundamental issues to provide a system that is more resilient over the long term
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