UK households will see their annual bill for gas and electricity fall by £238 a year from April.
Energy regulator Ofgem announced on Friday that the price cap — the maximum rate per unit that can be charged to customers for their energy use — will be 12.3% lower in April-June 2024, compared with January-March.
For an average household paying by direct debit for dual fuel, this represents a saving of around £20 a month.
At £1,690, the new average annual bill is the lowest since Russia’s invasion of Ukraine in February 2022 caused a spike in energy costs. However, bills are still well above pre-pandemic levels.
Ofgem also confirmed plans to maintain the equalisation of standing charges across payment methods. This means that customers with a prepayment meter will save around £49 per year while direct debit customers will pay £10 per year more.
The regulator said that affordability remains a significant issue and many people have struggled to pay their bills over the last two years, leading to record levels of energy debt.
To help cover the cost of dealing with £3.1bn of debt that customers owe to suppliers, Ofgem will allow a temporary extra charge of £28 per year (equivalent to £2.33 per month) which will be added to the bills of customers who pay by direct debit or standard credit.