Energy price cap decrease by £129 in July 2023 This amendment will have positive repercussions for the approximately 22 million households within England, Wales, and Scotland. This cut will decrease the average yearly invoice for households that consume an average amount of gas and electricity. Households will only have to pay £1,720 on average, instead of £1,849. The change comes as a relief for many households, particularly after the cap peaked at over £4,000 in January 2023.
Ofgem, the energy regulator, had a duty to reduce the energy price cap every three months. This cap determines the maximum amount that the market allows gas and electricity suppliers to sell gas and electricity to their customers. It was calculated on an average home’s yearly use of 11,500 kWh worth of gas and 2,700 kWh worth of electricity. Today’s reduction in the price cap is a significant step in the right direction. This figure has remained under the £2,000 threshold since July 2023, having seen previous months of volatility beforehand.
Cornwall Insight, an energy market consultancy, predicts that the new cap will provide nearly a 7% decrease in energy costs for consumers. Dr. Craig Lowrey, a principal consultant at Cornwall Insight, noted that “the fall in the price cap is a welcome development and will bring much-needed breathing space for households after a prolonged period of high energy costs.” He called this change “a step in the right direction.”
Even with this good news, some experts warn that clouds are still on the horizon. Abigail Ward, policy manager at the Energy Saving Trust hit on something fundamental. Households will be £100 a year worse off than last summer. She stated, “This proves that we’re still feeling the impacts of fluctuating international wholesale energy markets.” Ward stressed the importance of the UK government acting without delay. He’s seen firsthand how making homes more energy efficient saves people money on their energy bills.
Cornwall Insight’s latest forecast predicts a much less dramatic drop than first expected. Previous forecasts had the cap falling to £1,683. In a context of much higher wholesale energy prices, that expected gap has widened dramatically.
