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The energy price cap will be lowered this summer, Ofgem has confirmed.
The cap has been reduced from £2,500 to £2,074 – saving a typical household £426 annually.
The new cap comes into force from July 1 and will last until September 30.
In August this year, a new energy cap will be set for the last quarter of the calendar year.
What are energy price caps?
The energy price cap is a maximum price energy suppliers can charge consumers for each kilowatt hour (KWh) of energy.
The cap is set by the Office of Gas and Electricity Markets (Ofgem), which is an independent government regulator.
Since October, the UK Government’s Energy Price Guarantee capped a typical energy bill at £2,500 a year.
During the scheme, Ofgem’s price cap peaked at £4,279 for an average household. However, government intervention meant the price was capped at £2,500 for customers.
The Energy Price Guarantee is now set to end in late June, with Ofgem’s price cap now lower than the £2,500 set through the scheme, thanks to a fall in wholesale energy prices.
While the new Ofgem cap is the lowest typical energy prices have been since October, it remains above pre-2021 levels.
Ofgem CEO Jonathan Brearley said: “After a difficult winter for consumers it is encouraging to see signs that the market is stabilising and prices are moving in the right direction.
“People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs.
“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups.
“In particular, we will continue to work with government to look at all options.”
The UK Government has confirmed that from July, a discount specifically for those on prepayment meters will save them an average of around £22 a year, bringing them in line with those paying by direct debit.
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