Copy article

Ofcom energy cap announcement

ended 25. May 2023

Ofgem is lowering its energy price cap from the current £3,280 per year to £2,074 for the average household in England, Wales and Scotland, effective from July 1, it has just been announced. Ofgem said the £1,206 reduction to the cap reflected recent falls in wholesale energy prices. The lower cap will replace the Government’s Energy Price Guarantee (EPG), which currently limits the typical household energy bill to around £2,500. It means the average household will see their annual bill drop by £426. Any thoughts on this, e.g. whether it is enough, how much it will help the average household, send them across ASAP as this story is BREAKING.

4 responses from the Newspage community

Copy all

Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The impact or lower energy prices is the driving force of lowering inflation around the world. The raw costs have been falling for months and they finally find their way into consumers bills. This will mean the ‘trickle-down’ effect of inflation on everything else, like food prices currently, will also subside over time. The central banks should see this as an important sign to pivot on rate policy. Of course, this will affect affordability for mortgage loans and lenders will adapt over the next couple of months. This could well be a sign things will return to normal but it’s only the start of the beginning.
Copy

Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Any decrease in the price we pay for energy will help, but with other bills like food still increasing, this doesn't suddenly take the pressure off households. They are still under phenomenal pressure.
Copy

Premium
John Choong
Senior Equity Research Analyst at Investing Reviews
The new energy price cap of £2,074 which falls below the government's current Energy Price Guarantee (EPG) of £2,500 is certainly welcoming news. Approximately 27m UK households will benefit from this, which should further help with inflation from July onwards.

Having said that, most households will still be paying almost twice as much as they were before the cost-of-living crisis. What's more, prices aren't expected to decline to their pre-energy crisis levels in the medium term as providers are locked into rather long hedging contracts which purchase gas at a much higher rate than the current spot price. That being the case, average household income will still be squeezed for the foreseeable future.
Copy

Kirsty Kenney
It's important for consumers to remember that energy bills won't be 'capped' at £2,074. The actual cap is on the amount you can pay per unit of energy that you consume at home and the amount you pay each day to access that energy. The more energy you use, the more it will cost you. The headline figure misses the fact that, for most people, their bills will still be 80% higher than they were 2 years ago. Increasing your home's energy efficiency helps protect you from these high costs. Fix the roof while the sun shines.