Heat turned down on energy bills, but millions will still get burned

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of Ofgem’s energy price cap, which shows that the heat is turned down on energy bills, but millions will still get burned.

Key points from publication:

• • Energy bills will fall £426 in July – as the energy price cap falls below the energy price guarantee.
  • It’s the first drop in 18 months, although it still leaves bills at an eyewatering £2,074.
  • In October 2021, the cap was just £1,277.

Sarah Coles says:

“This will finally turn the heat down on energy bills for 29 million families.

“Unfortunately, prices are still scorching compared to where they were just 18 months ago, so millions of people still risk getting burned.

“Any drop in the price cap is great news, after a year and a half of unimaginably high energy prices.

“It will ease the pressure slightly on people on low incomes, who spend proportionally more on bills.

“It’s also comfort to those in larger or less insulated houses, and big families, who spend far more than average on their bills.

“However, these are still eye-watering prices. Last April we were bemoaning a horrendous hike, to blistering levels, and yet prices were lower than they are now – at £1,971. Just 18 months ago, the cap was at £1,277 – £797 below where we are now.

“It means the drop won’t be enough to protect the millions of people who are struggling with their bills.

“Figures from the ONS show that almost half (47%) of us are finding it difficult to pay our energy bills right now and 7% have fallen behind on payments.

“Among those in their 30s and 40s, this has risen to more than one in ten (11%).

“Citizens Advice says a record 32,400 people asked them for advice on energy debts in the first four months of 2023 – more than double the number in the same period in 2020.

“Unfortunately, we’re not expecting any really significant drops in our bills in the near future.

“A fall in the price cap will always prompt the question of whether people should fix their rate now.

“It’s impossible to accurately predict exactly where prices will go over the next year, but at the moment we’re expecting them to fall further and then rise again this winter.

“It means it’s worth keeping an eye out for fixed rates, and if you find something affordable, it may be an opportunity to get a bit more certainty about your bills.”

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay