The energy price cap in Great Britain will fall by £238 to £1,690 this spring thanks to a mild winter and lower gas prices, easing pressure on household finances.
Set by energy regulator Ofgem, the cap reflects the average annual bill for 29 million households in England, and takes effect from April. It is a 12.3% reduction from £1,928 in the current quarter.
In a boost to the poorest households, Ofgem also confirmed it would equalise standing charges – the set fee paid before any gas or electricity is used – meaning customers with prepayment meters will no longer be charged more for their connection than those on credit or direct debit.
Wholesale gas prices have fallen as a mild winter in Europe reduced demand, helped by plentiful supplies of liquified natural gas in Europe and Asia, leading to a fall in household bills.
The average household will still pay far more for their gas and electricity than before the energy crisis, which started in 2021 and escalated after Russia stopped piping gas to Europe following the full-scale invasion of Ukraine. The rate is at its lowest since March 2022, but far more than the £1,138 for customers paying by direct debt in the summer of 2021, before the crisis began.
The cap will be adjusted again in July. It does not limit the amount customers pay: those who use more energy pay more.
The energy consultants Cornwall Insight expect the cap to fall again in July, to £1,462, before rising to £1,521 from October.
Analysts had feared disruption to cargoes in the Red Sea could push gas prices significantly higher but rises have not materialised so far.
After pressure from fuel poverty campaigners, Ofgem said that, from April, households on prepayment meters will no longer pay a higher standing charge. This means metered consumers will save about £49 annually, while direct debit customers will pay £10 more each year.
Jonathan Brearley, the chief executive of Ofgem, said: “There are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.