- Ofgem’s latest energy price cap will see bills fall by £117 a year for an average household from April
- This is a result of wholesale energy costs falling by £38 a year and government policy changes
- Network costs have increased by £66 a year
Danni Hewson, AJ Bell head of financial analysis, comments on the latest energy price cap changes:
“Households can be forgiven for looking at the complicated figures that make up the UK’s energy price cap and wondering why the savings coming their way in April fall short of what the chancellor had promised them in November’s Budget.
“Rachel Reeves told people that scrapping a scheme introduced by the previous government and moving some costs onto general taxation would save them £150 a year. Wholesale energy costs have also fallen, albeit slightly, and that might have led people to expect even greater savings on their bills from April. But the total being saved by households on an average dual fuel bill will be just £117 a year.
“After the unpleasant heights endured over the past few years, saving £10 a month will be welcome, but the rising cost of maintaining and improving the network is worrying. This is especially the case as demand for electricity is set to continue rising as data centres, EVs and households switch away from gas heating and alter the UK’s energy requirements.
“There’s also a potentially bitter pill to swallow for those who have cut their energy usage way back, because it’s those who use the most power that will save the most from the changes. Some households will get savings of more than £150 a year, in particular people operating medical equipment or with other high electricity usage needs.
“There is good news for households who have already plumped for a fixed rate tariff, as their energy provider will be in touch to explain how the savings from policy changes will be passed onto them. And looking back at where things stood last year, the price cap is £200 lower and there are potential savings to be had for those who haven’t yet sought out a fixed rate tariff.
“But look back further and people are having to deal with the reality that the price cap is staying much higher than historic levels, and for people who have racked up high levels of debt the small moves coming in April won’t bring much relief.”
