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Energy price cap: Average annual energy bill set to fall by £238 in April

Energy price cap: Average annual energy bill set to fall by £238 in April

Energy bills will fall by 12.3 per cent in April to their lowest level since Russia’s full-scale invasion of Ukraine two years ago, regulator Ofgem said on Friday.

It has set the cap for the average annual household dual fuel bill at £1,690, a saving of £238 over the course of a full year, for the April to June quarter.

The move follows big falls in wholesale gas prices over a mild winter in Europe and will help around 29 million customers on standard variable tariffs.

Bills will still be almost 50 per cent higher than they were in April 2021 but are now £800 a year below the £2,500 level of Liz Truss’s Energy Price Guarantee that came into force in October 2022 amid rocketing gas and electricity bills. City economists predict that the spring fall in tariffs will help bring the overall rate of inflation down to as low as two per cent in April.

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Ofgem chief executive Jonathan Brearley said: “This is good news to see the price cap drop to its lowest level in more than two years — and to see energy bills for the average household drop by £690 since the peak of the crisis — but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.

“That’s why we are levelising standing charges to end the inequity of people with prepayment meters, many of whom are vulnerable and struggling, being charged more up-front for their energy than other customers.

“We also need to address the risk posed by stubbornly high levels of debt in the system, so we must introduce a temporary payment to help prevent an unsustainable situation leading to higher bills in the future.

“We’ll be stepping back to look at issues surrounding debt and affordability across the market for struggling consumers, which we’ll be announcing soon.” The energy price cap was introduced in January 2019 by Theresa May’s government, and Ofgem is required to regularly review the level at which it is set. Consumer groups welcomed the reduction but said it would still leave millions of families struggling to pay their bills.

Dame Clare Moriarty, chief executive of Citizens Advice, said: “It’s good news that the cost of energy is falling, but the impact of sky-high prices will be felt for years to come. We know more than five million people live in households behind on their bills and, with the price of energy still far higher than just three years ago, many people will struggle to pay off these debts.

“The Government promised a new plan for energy bill support by April 2024 but will miss its own deadline. And the withdrawal of cost-of-living payments this spring will make it so much harder for many of those already finding it difficult to make ends meet. Without action, people will face a cycle of winter crises year after year.”

Chief executive of National Energy Action, Adam Scorer, said: “This is, of course, good news — any fall in energy bills is welcome. However, the drop coming in April still leaves bills significantly higher than they were before the energy crisis began.”

Labour’s shadow energy secretary, Ed Miliband, said: “Whilst it is welcome the price cap is coming down, the truth is that energy bills are still far too high for hardworking families.”