UK Lowers Energy Ceiling Prices

The United Kingdom’s energy utility regulator has brought down its price cap to reflect recent decreases in wholesale prices, but warned the cap stays above pre-energy crisis levels and many households could still struggle to pay bills.

The annual amount suppliers can charge an average household drops to $2,550 (GBP 2,074) for the third quarter, from $4,040 (GBP3,280) in April-June, the Office of Gas and Electricity Markets (Ofgem) said in a press release. The figures are based on the typical consumption of dual-fuel households paying by direct debit.

“Today’s update means that, for the first time since the global gas crisis took hold more than 18 months ago, prices are falling for customers on default tariffs”, it said.

The revision, down more than two times against the price cap’s peak of $5,270 (GBP 4,279), was announced a day after the Office for National Statistics (ONS) reported an easing in annual household energy costs. The consumer price index inflation rate for housing and household services (water, electricity, gas and other fuels) stood 12.3% April 2023, down from 26.1 percent the prior month and 13.2 percent April 2022. 

Gas prices dipped one percent between March and April, the first easing in gas prices month on month since October 2020, the ONS said. The same period a year ago saw a 66.8 percent rise in gas prices.

Electricity prices also decreased 1.1 percent between March and April 2023, after spiking 40.5 percent in the same period 2022.

“People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs”, Ofgem chief executive Jonathan Brearley commented in the announcement.

But the agency warned though the price cap fell from the last quarter, “it is still above the levels it was before the energy crisis took hold, meaning many households could still struggle to pay bills”.

“While the price cap has dropped from its winter peak, it remains well above the pre-2021 average, and many people will still find such high bills difficult to pay”, it said, calling on “more focus” by the government and the industry to aid the most vulnerable this winter.

Brearley said: “Where people are struggling, we urge them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds.

“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups”.

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