
The cap is the highest rate per unit that gas and electricity companies can charge their customers, but there are also fixed rate tariffs and rates below this cap available to consumers.
The widely anticipated fall means that from 1 July, an average family on a price-capped tariff would see their annual bill go down to £1,720, a £129 per year decrease after three consecutive rises, if the price stayed the same for the rest of the year.
However, Matt Turner-Tait, senior manager at energy consultant BFY Group, said that although the fall is welcome, most of us use the bulk of our energy in winter, so this cut will save customers £30 – “barely denting rising council tax and water bills”.
“While this offers some relief for households on standard variable tariffs, typical annual bills are still expected to be around £1,700 – well above pre-crisis levels and only £30 lower than last year,” he said.
Better times ahead?
Alice Haine, personal finance analyst at DIY investment platform Bestinvest, said the new cap indicates that “better times lie ahead” for consumers.

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“Remember, the cap does not limit how much a household can be charged for their energy consumption; it is purely the maximum amount a dual-fuel household with a typical usage would pay if they were paying by direct debit.
“Ultimately, what households are charged depends on how much energy they use, so those consuming more energy than the average will pay higher bills and those using less will pay less. Note that the cap only applies to consumers on standard and default tariffs, so if someone has locked in a fixed-term energy deal, their bill won’t change,” she said.
The price cap changes every three months, based on wholesale energy prices. Energy consultants have predicted two further drops in the cap after this one, in October and January, but Dr Craig Lowrey, principal consultant at consultancy Cornwall Insight, said they will be “modest”.
Customers should still switch
While the drop in the cap is good news for customers, experts say they should still switch for the best rates. Some 65% of us are on price-capped tariffs, but most could save by switching away from them.
Martin Lewis, founder of MoneySavingExpert.com, said that although the fall is welcome, it is “nothing to shout home about”.
“It is only back to roughly a similar rate to where it was earlier in the year, before April’s rise, and crucially, energy bills this July will still be 10% higher than at the same time last year.
“Compare that to the cheapest fixes on the market today, which are 18% below the current cap,” he added.
He said the cheapest fixed rates will, if predictions prove true, undercut the current cap in every period for the next year.
To compare energy deals, you can use MoneySavingExpert’s Cheap Energy Club or comparison sites such as Uswitch.
However, Lewis warned that at present, when you see the savings you can make on a comparison site between a price-capped tariff and your current rate, these will be overinflated because you are comparing with the current rate, not the one that will apply from July.
“You need to factor that into your calculations,” he said.