The UK’s energy regulator, Ofgem, confirmed today (24 May) that the energy price cap for Q3 2024 will fall by 7% from the previous quarter.
The maximum bill for the average household paying by direct debit for a dual fuel tariff will be around £1,568 annually, down £122 from the previous quarter.
While this is a positive development in the short term, energy prices still remain significantly higher than before the energy crisis began in 2021, with bills forecast to increase once again this coming winter.
Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit (ECIU), said: “Households are still struggling with bills that are hundreds of pounds higher than pre-crisis levels, and estimates suggest bills may rise again as we head into winter. The UK spent around £100bn on gas over the past two years.”
Ralston added: “We could have learned lessons from the crisis and insulated our buildings, built more renewables and moved away from gas boilers, but instead, home insulation schemes are unambitious, the last renewables auction secured no more offshore wind, and the shift to electric heat pumps has been delayed.”
Energy UK’s deputy chief executive, Dhara Vyas, called the announcement “good news” for those facing high bills but added: “As Ofgem underlined earlier this week, it’s only a return to relative normality. Energy bills are still larger than they were just over two years ago, and prices will remain high and unstable for some time to come.”
Mike Thornton, chief executive of Energy Saving Trust, further cautioned that “no one should take this lower price cap as a sign of stability,” noting that “Forecasts show that energy prices are set to rise again this autumn and will be staying high overall for the next decade.”
A focus for the next government
With Rishi Sunak announcing this week that a general election will take place in just six weeks, energy prices are likely to be a campaign focus for all the major political parties.
The ECIU’s Jess Ralston noted: “Whatever colour the next government is, we’ll be heading into a winter still heavily dependent on volatile gas markets, going backwards on our energy independence. The cost of living, driven in part by energy bills, and the UK’s energy security may well be key election issues – so how the parties choose to tackle them will likely be in the spotlight.”
Support for families struggling to pay energy bills is likely to be of particular importance to voters. Ofgem recently revealed that 2.3 million households are in energy debt or arrears, an increase of 20% from the previous year, while total household energy arrears rose to £3 billion in 2023.
Dhara Vyas added to calls for more support, stating: “Customer debt is at record levels and likely to increase still further, so despite suppliers’ ongoing efforts to support households, the next Government must work with the industry and Ofgem to put in place a long-term solution that provides targeted help for those who need it and ensures so that bills are affordable for everyone.”
Many are concerned about the UK’s ageing housing stock and its impact on household energy bills. While the government recently awarded almost half a billion pounds for the decarbonisation of public buildings, many, including Mike Thornton of the Energy Saving Trust, want to see more support for homes.
Thornton said: “After the election, the incoming UK government must prioritise policies that support people to use less energy and install cost-effective energy efficiency improvements in their homes. This will be fundamental to bringing down energy bills, reducing carbon emissions and guaranteeing our energy security for the long term.
“A coordinated, long term retrofit plan for England which incentivises measures from improved insulation to electrified heat must be central to any incoming UK government’s ambition. Now is the time to commit to making our homes ready for a net-zero future and ending our dependence on volatile international fossil fuel markets for good.”
