New Price Cap Predicts £238 Annual Savings on Energy Bills
The UK’s energy regulator plans to implement a new price cap, leading to the lowest typical annual energy bill in two years, starting from April. The move comes as wholesale prices for energy have decreased, prompting a reduction in the price cap for April to June. The anticipated drop is £238 annually or around £20 monthly for households with average energy consumption. While this provides some relief to billpayers, campaigners argue that energy bills remain high, posing challenges for many consumers.
The price cap, overseen by Ofgem, impacts 29 million households in England, Wales, and Scotland. Notably, Northern Ireland follows different rules where prices are also decreasing. Ofgem establishes the maximum charges per unit of gas and electricity, though the total bill depends on individual usage.
Specifically in England, Wales, and Scotland, the new price cap sets gas prices at 6p per kilowatt hour (kWh) and electricity at 24p per kWh, compared to the current rates of 7.42p per kWh and 28.62p per kWh, respectively. Households with prepayment meters will see a slight reduction compared to direct debit users, with a typical bill of £1,643. Those paying quarterly by cash or cheque will face a higher bill, averaging £1,796.
The regulator will also add £28 annually to everyone’s bill to cover the cost of dealing with £3.1 billion of customer debt owed to suppliers.
Despite the drop in energy prices to their lowest since Russia’s invasion of Ukraine in 2022, bills will remain significantly above pre-pandemic levels even after the April reduction. Ofgem emphasizes its commitment to addressing the systemic issues in the energy sector, providing swift justice, and financial redress for those wrongly convicted. The legislation aims to rectify the profound impact of the Post Office scandal, representing a critical step towards restoring the reputations and lives of the innocent victims ensnared in its repercussions.
