UK households are set to see a modest drop in their energy bills this summer, after regulator Ofgem revealed a seven per cent cut to its quarterly price cap – the first reduction in a year.
The announcement will bring the average annual bill for a typical household in the UK down from £1,849 to £1,720 between the months of July and September.
Offering short-term relief to consumers grappling with persistently high living costs, the move comes as a modest win for Keir Starmer’s government, which has faced growing pressure to act on affordability.
It follows a decline in wholesale gas prices, helped by mild weather and tempered demand across the pond, according to analysts at Cornwall Insight.
But, while the dropped cap will reduce household outgoings, experts have warned that underlying problems driving energy unaffordability will continue to persist.
Craig Lowrey, principal consultant at Cornwall Insight, welcomed the development, yet implied that energy “will remain unaffordable for many” without deeper policy intervention.
He urged the government to prioritise targeted support, such as introduing social tariffs.
This announcement follows a bruising period for energy consumers.
Bills remain hundreds of pounds higher than before the energy crisis of 2021, and April inflation data showed utility costs contributing to a 15-month high of 3.5 per cent in overall inflation – dampening hopes for near future rates cuts by the Bank of England.
Pressures remain despite lower bills
Beyond the latest change, broader structural questions loom, too.
In comments made last month, Ofgem chief exec Jonathan Brearley flagged growing inequality in how energy costs are distributed, particularly as fixed charges like the standing fee begin to account for a larger share of household bills.
Ofgem is preparing a summer review into the future of allocation, with proposals expected to explore whether higher earners should be shouldering more of the burden in supporting the UK’s energy infrastructure.
Brearley said: “We expect variable costs to come down, but the proportion of costs tha are fixed will rise”.
“If unchecked, that could exacerbate the inequalities we see today”.
The debate unfolds as the UK rallies to decarbonise its energy system, investing heavily in renewables while dealing with the affordability of that transition for consumers.
The energy price cap, first introduced in 2019, remains a key lever in protecting households from price volatility, but questions remain on whether it is enough.
By CityAM
