Energy bills to fall by £117 a year as Ofgem confirms major price cap change

The energy price cap sets the maximum rate per unit and standing charge suppliers can charge households with average energy usage.

As a result of this change, families paying direct debit for gas and electricity will pay £1,641 per year.

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Notably, Ofgem cited recent Government budget interventions relating to policy costs as the main cause of energy bills falling, with Chancellor Rachel Reeves slashing £150 off costs from July.

Furthermore, this drop in the energy price cap means the threshold is more than £200 than it was a year ago.

Tim Jarvis, the director general for Markets, at Ofgem, said: “Today’s announcement will be welcome news for many households. Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system.

“The main driver of today’s reduction is the change to policy costs announced by the Chancellor in the budget. Our focus at Ofgem remains on bearing down on the costs within our control, and unlocking the investment needed to support the transition to a more stable energy system over the longer term.

“We’re also seeing encouraging signs of greater engagement and competition, with switching increasing by almost 20 per cent year on year.

“More households are choosing time‑of‑use tariffs that offer cheaper off‑peak rates, and suppliers are offering a wider range of products, including deals with savings at evenings or weekends.

“The price cap protects households from overpaying for energy, but it’s a safety net. Last year, consumers on fixed deals paid around £115 less than the cap on average, so we’d encourage people to speak to their supplier about the options available and consider whether a different tariff or payment method could help bring their bills down further.”