UK households will pay £1,206 less per year for their energy bills from July 1 as Ofgem has announced its new price cap.
Today (Thursday) the energy regulator Ofgem has said the price cap will drop from £3,280 to £2,074. The "cap" dictates what almost all homes in England, Scotland and Wales will pay for their electricity and gas.
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.
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It means the average household will see their annual bill drop by £426. Discussing the drop on Good Morning Britain, Martin Lewis said: "Think of it as for every £100 you're paying now, from July you'll be paying £83".
A new price cap will be brought in from October, with experts predicting it to fall to around £1,976, though this is an educated guess at this stage given it is still some way off.
The cut to the cap marks the first time consumers on default tariffs have seen their prices fall since the global gas crisis took hold more than 18 months ago, Ofgem said.
At its peak, the price cap reached £4,279 and, "whilst today's level is lower than last quarter, it is still above the levels it was before the energy crisis took hold, meaning many households could still struggle to pay bills", the regulator added.
Ofgem chief executive Jonathan Brearley said more focus will be needed for government, the regulator and the industry to support the most vulnerable groups this winter.
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