Energy bills to fall just £19 per month for average household as Government support ends

The average household will save £426 a year on energy bills from July as Ofgem lowers its price cap – but only on paper.

In practice, most will save just £225, or £18 a month, as monthly government energy bill support payments come to an end.

Households must also grapple with predictions that energy bills will remain around £2,000 a year for the remainder of 2023.

Ofgem’s price cap will drop to £2,074 a year for an average household in July, the energy regulator said today.

That price cap applies to the 80 per cent of homes in England, Scotland and Wales with variable rate energy deals, which pay by direct debit.

The price cap is currently £3,280 for typical gas and electricity consumption, but for most homes that has been capped at £2,500 due to government support, the so-called energy price guarantee.

Based on the difference between the current price guarantee and the new price cap, the average household would save £426 a year from July, or about £36 a month.

But compared to earlier this year, the majority will actually be better off on just £225 or £227 – or £18 to £19 a month – as the government does not accept the rebate payments made under the £400 Energy Bills Support Scheme extends.

This scheme automatically gave six monthly energy bill discounts, three of £67 and three of £66, to households with standard meters. Homes with prepayment meters had to redeem vouchers to get £400 off.

These payments started in October 2022 and lasted until March 2023. This meant that between October 2022 and January 2023, the average home received a £199 reduction in energy bills.

Most homes got that discount on top of the £2,500 energy price guarantee which started in October 2022, so the majority paid £2,301 in real terms.

That turned into a £201 cut between January and April 2023, with a typical utility bill of £2,299 for this period – again, down from £2,500.

From April to July 2023, there will no longer be a government energy bill discount scheme, unless a household is claiming low-income benefits, disability benefits or is elderly.

That means energy bills for most homes were at the full £2,500, until the beginning of July this year, when they will drop to £2,074.

But that £2,074 figure is just £227 less than most homes paid for energy each year from October 2022 to January 2023, and £225 less than they paid from January to April this year.

With a price cap, experts think the average energy bill will remain around £2,000 a year for about 12 months – the most recent forecast available.

Cornwall Insight analysts believe the price cap will be £1,975.70 per annum from October to December 2023, then rise to £2,044.96 from January to March 2024 due to higher energy demand in winter.

All these figures are just averages, as if a household consumes more energy, then it will still pay more.

With our calculator you can calculate how much your house will pay in energy if the price cap changes.

Benefit low-income households

All of those amounts change if someone in a household claims a means-tested benefit such as Universal Credit or Pension Credit.

That’s because the government launched a £650 Cost of Living Payment scheme for recipients of such benefits last year.

Cold comfort: Ofgem’s price cap may be falling, but households may not be saving as much as they think

This was split into two parts: £326 in July 2022 and £301 in November.

This scheme meant households on means-tested benefits paid £1,645 a year for energy in real terms between April and October last year, instead of £1,971.

Between October 2022 and January 2023, these properties paid £2,176, not £2,500 under the energy price guarantee – or the eye-watering £3,549 under the Ofgem price cap at the time.

The government has extended this cost of living scheme for 2023 and 2024.

The first payment under the extension was £301, paid in May 2023, bringing the average bill to £2,199 for households on means tested benefits.

Help with paying your energy bill

Cash and vouchers from the Household Support Fund

Households struggling with the cost of living can apply for cash and vouchers from the Household Support Fund.

That’s a £2bn pot of public money distributed by local councils to people in their area.

The scheme is a postcode lottery, as each municipality decides how the money is distributed – and to whom.

Some municipalities issue vouchers, others, for example, in cash.

Local authorities have distributed cash and vouchers worth several hundred pounds per home.

Anyone can apply, but they may have to meet eligibility rules, such as being on a low income.

£150 disability living expenses

More than six million people receiving certain disability benefits will be eligible for a payment of £150 this year, paid automatically.

The government has not yet set an exact date for this, but says it will be in the summer.

Help: Retirees can get a living allowance if they also qualify for winter fuel payments

£300 for pensioners this winter

Pensioners who receive winter fuel payments are also eligible for £150 or £300 as pensioner living expenses payment.

The money is intended to help pay energy bills, which tend to be higher for the elderly as they need warmer homes and may have medical equipment that can be plugged in.

Winter fuel payments are worth up to £600 and are paid to households with someone born before 26 September 1956.

In addition, eligible applicants should automatically receive a cost of living payment of £150 or £300 for pensioners.

£400 for homes without an electricity or gas meter

Around 900,000 households without an electricity or gas meter can apply for £400 under the Energy Bills Support Scheme Alternative Funding.

That includes people in park homes, people living off-grid, and many properties that rely on heating oil.

However, these properties will have to apply to get the money – and maybe not until this winter.

Homes must apply for the £400 on this government portal or by calling 0808 175 3287.

£200 for those not connected to the mains gas

Households that do not use gas to heat their homes can claim £200 in utility bill assistance from the government.

The Government’s Alternative Fuel Payment Scheme offers payments of £200 to those using fuel oil, liquefied petroleum gas, wood, biomass boilers and other alternative fuels.

Most eligible households get the £200 automatically, as they have a contract with a domestic electricity supplier who can handle the payment.

But homes without a gas connection or electricity supplier must apply for the £200 online.