A dip in domestic energy prices is anticipated for July, marking the first decrease in a year according to regulator Ofgem’s price cap. Analysts from the consultancy Cornwall Insight predict that the bill for a household using an average amount of gas and electricity will shrink by £129 annually, translating to a nearly 7% drop. This adjustment would lower the typical dual-fuel customer’s yearly bill to £1,720, down from the current rate of £1,849.
The price cap alteration affects approximately 22 million households across England, Wales, and Scotland, and is revised every three months by Ofgem. Notably, the cap is based on the cost of each unit of energy consumed, rather than the total bill amount, resulting in higher costs for those using more energy. The benchmark for a typical household under this price cap is an assumed annual usage of 11,500 kWh of gas and 2,700 kWh of electricity, with combined billing through direct debit.
Dr. Craig Lowrey, principal consultant at Cornwall Insight, welcomed the drop in the price cap, stating that it offers relief amidst elevated energy expenses. Nevertheless, he emphasized that the reduction may not be sufficient for households grappling with the cost of living, as bills remain significantly higher compared to previous years. Policy manager Abigail Ward from the Energy Saving Trust echoed similar sentiments, noting that despite the forecasted cheaper bills, households are still grappling with an additional £100 in energy expenses compared to the previous summer, attributable to volatile international wholesale energy markets.
Andy Manning, head of energy policy at Citizens Advice, acknowledged that the decline in energy prices could alleviate financial strain for some households. However, Manning highlighted the ongoing struggle faced by individuals affected by the energy crisis, emphasizing the need for government intervention to address affordability concerns. Research from Citizens Advice reveals that a substantial number of households in Great Britain are burdened by energy debt, underlining the urgency for sustained support and policy measures to alleviate financial pressure
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