From today energy prices are expected to reduce for 21 million UK households under Ofgem’s latest price cap, though experts warn these downward trends may not continue for long.
The independent regulator have revealed their latest energy price cap sits at £1,720 from today (Tuesday 1st July). The news represents a 7% reduction compared to the previous cap, which totalled £1,849.
According to Ofgem, the cap, which sets the limit on how much firms can charge customers per unit of energy, is due to stay in place until 20th September 2025.
In another bout of good news, analyst Cornwall Insight is estimating that the cap will fall by an additional 1% in October as a result of easing Middle East tensions. The organisation expects the cap to drop to £1,698.
While these forecasts have been welcomed with open arms, Craig Lowrey, principal consultant at Cornwall Insight, warms people shouldn’t get too excited.
‘While any reduction in energy bills is welcome, we must not let small fluctuations in the price cap mask the bigger picture,’ Craig said. ‘Households are still paying far more for their energy than they were before the pandemic, with the current outlook showing little prospect of a meaningful drop over the next few years.’
Ofgem have reassured that the latest cap is £660 lower than at the height of the energy crisis at the beginning of 2023 – when the government introduced the energy price guarantee – but prices remain 10% higher than this time last year.
Against this backdrop, Ofgem have likewise announced the go-ahead to invest £24bn to help upgrade UK energy infrastructure, but revealed the decision will send network charges on household bills soaring by more than £100.
‘Our reliance on international energy markets means that while we have a range of supply sources, this brings with it a vulnerability to global events and price shocks – something that was evident in June,’ Craig continued. ‘If we want to bring real stability and affordability to the energy system, we need to continue, and speed up, our transition to homegrown, renewable power.
‘This transition will not happen overnight, and there will be short-term costs along the way. However, in the long-term, building a more self-sufficient energy system is the only way to help shield consumers from international volatility and put us on a more secure and sustainable path for the future.’
Photo by Henning Wiekhorst via UnSplash
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