By Kevin Peachey
Cost of living correspondent
People will see a significant fall in their energy bills from July after a cut in the energy price cap for England, Wales and Scotland.
A typical household will now pay £2,074 a year on its gas and electricity bill, £426 a year less than currently.
It will mark the end of a government guarantee which, since October, has limited the typical bill to £2,500.
It could also signal the return of competition to the market, with people able to shop around for the best deal.
Regulator Ofgem sets the maximum price that can be charged per unit of gas and electricity to households on variable or default tariffs in England, Wales and Scotland.
Since October, it has been superseded by the government’s Energy Price Guarantee, which meant a typical household’s annual gas and electricity bill has been £2,500, but this will expire at the end of June. A £400 discount on everyone’s energy bills, provided by the government during the winter, came to an end in April.
Most households do not use a typical amount of gas and electricity. Bills are based on how much energy a household actually uses, which depends on the number of people, the type of property and its energy efficiency.
Those who pay via a prepayment meter will pay a very similar level to those on direct debits, paying £2,077 a year from July.
However, those who pay by cash, cheque or bank transfer, usually every three months, will have to pay more. Their price cap is £1,270 a year for a typical household.
Energy is regulated separately in Northern Ireland, where bills will be held at £1,950 per year for an average household.
Ofgem boss Jonathan Brearley said while it is good news that energy prices will fall from July, they are still relatively high – and likely to stay that way for some time.
“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis,” he told Radio 4’s Today Programme that
He urged people to contact their supplier for support if necessary.
Despite the drop, charity National Energy Action said that 6.5 million people would still be in fuel poverty.
And Simon Francis, coordinator of the End Fuel Poverty Coalition, said customers woudl still be paying roughly the same for their energy as last winter.
“And after months of inflation and the wider cost of living crisis, people are even less able to afford these high energy bills.”
A typical annual bill is expected to remain at around the £2,000-a-year mark for the rest of the year. However, earlier this week, Qatar’s energy minister warned the “worst is yet to come” for gas shortages in Europe, suggesting prices could rise again.
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