Rishi Sunak promises to put energy bills at the heart of the election campaign. Photo: Pool/Getty Images Europe
Energy price caps have been slashed by more than £120 a year, helping millions of households as the Conservative Party promises to offer more support to bill payers.
Ofgem announced today of a 7% reduction in the price cap, taking the average annual direct debit bill from July to £1,568, down £122.
This means energy costs are at their lowest level since then since Russia's invasion of Ukraine in February 2022 caused a global price spike.
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Today's announcement comes as the Tories and Labor parties clash over energy and how each will try to cut utility costs.
Labour leader Sir Keir Starmer will use visit to Scotland to promoting his plan to build a government-owned clean electricity generator that he says will cut bills and improve energy security. Labor noted that bills were still £400 higher than in 2021.
Meanwhile, Energy Secretary Claire Coutinho set out plans for consumer-friendly changes and accused Labor of being “dishonest about the costs” the transition to net zero power would entail .
However, the latest fall in prices is largely due to external factors following the decline in global energy prices, especially gas, in international markets: the UK imports more than half of its gas supply.
The price of gas also affects the price of electricity as about 40% of electricity is generated using gas stations.
Around 18 million dual fuel households pay by direct debit, but five million are subject to a price cap on standard credit. slightly higher at £1,668, reflecting the extra costs incurred by companies.
The four million households using a prepayment meter will pay slightly less at £1,522.
Ongoing charges remain unchanged and are £334 for dual fuel customers and £369 for those paying with standard credit.
The new cap will apply from July to September, when Ofgem will again adjust the price in line with global changes. energy prices.
Despite the fall, prices are still well above April 2021 levels, before the global energy crisis, when the price cap was just £1,138. Industry experts say prices are unlikely to fall to this level in the foreseeable future.
Sir Keir will blame the Government for “14 years of Tory chaos”, adding: “Families are taking responsibility for 14 years of Tory energy failure and are expected to be left a staggering £400 a year worse off under the new price cap.
He will say: “Work will prevent families from overpaying for energy. Great British Energy, our new state-owned energy company, will invest in domestic clean energy to increase energy independence and cut costs for good.»
Ms Coutinho said Labour's commitment to decarbonising the electricity system by 2030 would «bring us back to square one by forcing voters to pay more for net zero.»
She said moving away from Northern oil and gas sea will bring 200,000 jobs at risk.
The Energy Secretary has set out her own energy policy, including maintaining Ofgem's cap throughout the next Parliament to help bring bills down.
Under Tory proposals, price comparison services would be made easier to use and Ofgem could publish league tables showing how long it takes energy companies to respond to customer complaints.
Ms Coutinho said: “Only the Conservatives have clearly plan for a secure future in which we achieve net zero without penalizing families with additional costs.”
A price cap is a mechanism for limiting what suppliers can charge domestic consumers per unit of energy. It also limits the standing charge — the cost of maintaining the infrastructure and wiring needed to supply energy to homes.
Ofgem, the government regulator which resets the cap every quarter, expresses this figure as the charge for the average household using both electricity and gas at a dual-fuel tariff and paid by direct debit.
The amount is based on a typical dual-fuel household in England, Scotland and Wales — the actual amounts paid by consumers. will vary depending on actual consumption.
Dame Claire Moriarty, chief executive of Citizens Advice, said: “Today's news will come as little comfort to families still struggling with the cost of living. Lowering the electricity price cap lowers bills slightly, but our data tells us millions of people are in the red or unable to cover their basic expenses each month.
“People can't rely on lower electricity prices alone energy resources to avoid the financial problems they were facing. That's why we need more targeted support for energy bills for those who are really struggling to turn on the lights or cook a hot meal.»
Dhara Vyas, deputy chief executive of Energy UK, the trade body for electricity suppliers, said: «The price cap cut again is good news… however, as Ofgem highlighted earlier this week, it is merely a return to relative normality.
«Customer debt is at record levels and is likely to rise further . Therefore, despite ongoing efforts by providers to support households, the next government must work with the industry and Ofgem to develop a long-term solution that ensures targeted support to those who need it.”
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