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Britain’s family vitality payments are set to fall in the summertime after regulator Ofgem lowered the worth cap by 7 per cent, in a lift to Sir Keir Starmer’s authorities because it tries to deal with the excessive price of dwelling.
Ofgem on Friday set the worth cap for July to September at a stage that will imply a typical family pays £1,720 per yr, down from £1,849 at current, following a fall in wholesale fuel costs.
It’s the first discount within the cap since July 2024 and can present some aid for households struggling to pay vitality payments.
Utility payments helped drive inflation to a 15-month excessive of 3.5 per cent in April, in line with figures launched this week, dampening expectations of rate of interest cuts from the Financial institution of England.
Ofgem’s transfer comes as the federal government this week stated it could backtrack on cuts to winter gasoline funds for pensioners, following a public backlash.
Regardless of the lower within the cap, payments can be 9 per cent greater than final summer time, stated Ofgem, and stay a whole bunch of kilos a yr greater than earlier than the vitality disaster that began in late 2021.
Craig Lowrey, principal marketing consultant at market analysts Cornwall Perception, stated the discount within the cap was a “welcome improvement” however there remained a threat that “vitality will stay unaffordable for a lot of”.
He urged the federal government to “proceed to discover focused help, together with social tariffs, to make sure these most in want will not be left behind because the market evolves”.
The worth cap units a restrict on how a lot vitality corporations can cost properties on default tariffs per unit of fuel and electrical energy consumed. It’s reset each three months to mirror adjustments in wholesale costs.
Fuel heats the overwhelming majority of Britain’s properties and is used to generate greater than one-third of its electrical energy, which means any adjustments in wholesale costs have an effect.
Ed Miliband, the UK’s vitality secretary, welcomed the discount within the cap, however stated costs would solely come down “for good” via the federal government’s plan to construct extra renewable energy capability.
The UK imports practically 90 per cent of its fuel from Norway and the US, in line with official statistics.
Cornwall Perception stated wholesale fuel costs had fallen in current months, partly resulting from gentle temperatures and the prospect of a slowing demand within the US.
It expects Ofgem will set the worth cap at an identical stage for the ultimate three months, a interval when households sometimes eat extra vitality.
On a per unit foundation, the cap for July to September can be 25.7 pence per kilowatt-hour for electrical energy with a every day standing cost of 51.4 pence. For fuel, the cap can be 6.3 pence per kWh with a every day standing cost of 29.8 pence.
That compares with the present cap of 27.03 pence per kWh for electrical energy with a every day standing cost of 53.80 pence, and 6.99 pence per kWh for fuel with a every day standing cost of 32.67 pence.