Introduction: Average annual fuel bill to fall 12% to £1,690 under price cap, but â6m households trapped in fuel poverty
Good morning, and welcome to our rolling coverage of business, the financial markets and the economy.
The average annual dual fuel energy bill in in Great Britain will fall by 12% to £1,690 from 1 April, under a new price cap announced by the regulator Ofgem.
The price cap, which sets a maximum rate per unit that can be charged to customers for their energy use, will fall by 12.3% on the previous quarter from 1 April to 30 June. For an average household paying by direct debit for dual fuel, this equates to £1,690, a drop of £238 over the course of a year â saving around £20 a month.
Jonathan Brearley, Ofgemâs chief executive, said:
This is good news to see the price cap drop to its lowest level in more than two years â and to see energy bills for the average household drop by £690 since the peak of the crisis â but there are still big issues that we must tackle head-on to ensure we build a system thatâs more resilient for the long term and fairer to customers.
Thatâs 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. Weâll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which weâll be announcing soon.
Campaigners say this wonât stop 6m households from being trapped in fuel poverty. The charity National Energy Action says the typical bill is is still more than £400 a year more than it was in October 2021, the beginning of the energy crisis,, when 4.5 million households were in fuel poverty.
Adam Scorer, chief executive of the fuel poverty charity, said:
This is, of course, good news â 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. For two and a half years, household budgets have been stretched beyond breaking point by high energy bills.
Households in fuel poverty, on negative budgets and in impossible debt will see no chink of light this morning. The cost gap between where they are right now and escaping fuel poverty is getting wider. Whatever relief might be felt by this news, years of punishingly high energy bills will continue to take a heavy toll.
Stubbornly high prices are here for the foreseeable future â the government cannot simply ignore this as the new normal. We need a social tariff to provide permanent, deep protection for low-income households, we need action on debt to bring households out of this spiral, and we need long-term, significant investment in energy efficiency to make sure households are resilient against energy crises.
The Agenda
Key events
Ed Miliband MP, Labourâs shadow energy secretary, 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.
Rishiâs recession means Britain is paying the price for 14 years of Conservative failure. From banning onshore wind, to crashing the markets for offshore wind and solar, Conservative energy policy has failed.
Only Labour can bring down energy bills once and for all, with our plan to switch on Great British Energy, a homegrown clean power company for our country.
Here is our full story:
Ofgem said the cost of living remains high and many customers continue to struggle with their bills, as standing charges rise and energy debt reaches a record figure of £3.1bn.
Therefore, today Ofgem also announced:
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Confirmation of the levelisation of standing charges to remove the âPPM premiumâ previously incurred by prepayment customers.
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A decision to allow a temporary adjustment to the price cap to address supplier costs related to increased levels of bad debt.
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A decision to extend the ban on acquisition-only tariffs for up to another 12 months, the practice of offering cheaper deals exclusively to new customers.
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Confirmation of the end of the Market Stabilisation Charge (MSC) from 1 April. The charge temporarily requires all domestic suppliers acquiring a domestic customer to pay a charge to the losing supplier, when wholesale prices fall considerably below the relevant wholesale price cap index.
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A decision not to change wholesale cost allowances following a review conducted in late 2023.
Introduction: Average annual fuel bill to fall 12% to £1,690 under price cap, but â6m households trapped in fuel poverty
Good morning, and welcome to our rolling coverage of business, the financial markets and the economy.
The average annual dual fuel energy bill in in Great Britain will fall by 12% to £1,690 from 1 April, under a new price cap announced by the regulator Ofgem.
The price cap, which sets a maximum rate per unit that can be charged to customers for their energy use, will fall by 12.3% on the previous quarter from 1 April to 30 June. For an average household paying by direct debit for dual fuel, this equates to £1,690, a drop of £238 over the course of a year â saving around £20 a month.
Jonathan Brearley, Ofgemâs chief executive, said:
This is good news to see the price cap drop to its lowest level in more than two years â and to see energy bills for the average household drop by £690 since the peak of the crisis â but there are still big issues that we must tackle head-on to ensure we build a system thatâs more resilient for the long term and fairer to customers.
Thatâs 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. Weâll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which weâll be announcing soon.
Campaigners say this wonât stop 6m households from being trapped in fuel poverty. The charity National Energy Action says the typical bill is is still more than £400 a year more than it was in October 2021, the beginning of the energy crisis,, when 4.5 million households were in fuel poverty.
Adam Scorer, chief executive of the fuel poverty charity, said:
This is, of course, good news â 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. For two and a half years, household budgets have been stretched beyond breaking point by high energy bills.
Households in fuel poverty, on negative budgets and in impossible debt will see no chink of light this morning. The cost gap between where they are right now and escaping fuel poverty is getting wider. Whatever relief might be felt by this news, years of punishingly high energy bills will continue to take a heavy toll.
Stubbornly high prices are here for the foreseeable future â the government cannot simply ignore this as the new normal. We need a social tariff to provide permanent, deep protection for low-income households, we need action on debt to bring households out of this spiral, and we need long-term, significant investment in energy efficiency to make sure households are resilient against energy crises.
The Agenda
