Following a reduction in the price cap, which sets a limit on how much suppliers may charge consumers for each unit of energy they use, homeowners will notice a big reduction in their energy bills starting in July. According to Ofgem, the average household’s annual gas and electricity bill would now cost £2,074. The government’s Energy Price Guarantee, which has kept the average payment at £2,500 since October, may come to an end as a result. So what is the energy cap?
In recent years, the energy price cap, which Ofgem now establish every three months, the industry regulator for the energy sector, has regulated the costs for variable tariff energy plans in England, Wales, and Scotland. It confirms the maximum cost that suppliers may bill homes for a unit of energy under a typical or default tariff.
After Russia invaded Ukraine, prices shot up. This prompted officials to declare that household expenses would now be altered. This meant a government guarantee to constrain them. A typical household’s yearly gas and electricity cost has been £2,500 under this since October. Note however Ofgem continued to set its own cap at a higher amount.
After the Energy Price Guarantee expires at the end of June, The Ofgem cap will once more determine costs. This starts, naturally, in July.
Forecasters anticipate a decrease in the average yearly cost to roughly £2,050. This is as a result of suppliers paying lower wholesale pricing. In Northern Ireland, where governing of energy is separate, there is a capping of household expenses at £1,950 annually.
That is impossible to tell for certain, not least because global issues affect wholesale prices. One such example is the war in Ukraine. But according to energy consulting firm Cornwall Insight, homeowners in England, Wales, and Scotland will see another decrease after the one in July. The company anticipates the average annual cost to be £1,976.