Millions of Britons will see their energy bills drop as the price cap drops 7%

After Ofgem announced that its domestic price cap will fall by 7% in July to reflect lower wholesale prices, millions of British households can expect lower energy bills. The government is under pressure to ease the cost of living squeeze and this reduction comes as welcome news.

Global wholesale energy prices have fallen. "While this is the primary cause, changes in supplier business costs also had an impact on falling energy prices," Ofgem stated in a press release.

The regulator's formula for calculating the price cap includes wholesale gas and electricity prices. Benchmark British Gas Prices have fallen by almost 40% from their February peak, due to fears of an industrial slowdown, a global trade war as well as the EU Parliament's support for weaker storage regulations.

Even though domestic energy prices have fallen, they are still around 50% higher today than in summer 2021. That was before Russia invaded Ukraine and sent gas prices skyrocketing, causing a price crisis for energy in Europe.

Consumer groups have warned that the cost of energy is still unmanageable in many homes and called for greater support for those who are struggling. "Any drop in energy prices is welcome, but it is only a small fall after a steep rise. Adam Scorer is the Chief Executive Officer of National Energy Action. He said that bills for low-income families remain high. Keir starmer, British Prime Minister Keir said on Wednesday that he recognized that older people are still feeling the strain of high energy prices. He wants to make sure that more pensioners qualify for winter fuel payments after reducing the number eligible last year.

Ofgem has lowered the cap to 1,720 pounds ($2,314.43) per year for electricity and gas usage. This is 129 pounds less than what was previously set for April-June.

(source: Reuters)