Energy bills will fall in April as the energy price cap for the average dual fuel household drops from the current £1,928 a year to £1,690 a year.
This means a typical home that pays by direct debit will see bills drop by £238 a year, with the price cap to fall to its lowest level since February 2022.
Sarah Pennells, consumer finance expert at Royal London, said: “Although much anticipated, and welcome news for many energy bill payers, it’s just a fraction of the amount by which household bills have risen since the start of the cost of living crisis.
“Falling prices are welcome but are not a miracle fix for those struggling with higher bills or in debt with their energy company.”
She encouraged households to shop around for the best energy deal. The expert said: “If you’re in credit on your energy bill and pay by direct debit, you may be able to reduce your monthly payments.
“However, today’s announcement should also encourage anyone who hasn’t shopped around for a new energy deal for a while to have a look at what options are available and consider if now is the time to switch.
“This also includes people who locked into a fixed rate deal when prices were high, but which now looks expensive. However, fixed rate tariffs often come with exit fees, so anyone on one of these deals should factor the cost of those fees into any saving they could make.”
Richard Neudegg, director of regulation at Uswitch.com, encouraged those on a standard variable tariff to look around for a better deal.
He explained: “Some fixed deals available offer savings against the current price cap, but we expect there to be increased competition on the market now prices are set to fall in April.
“If you’re thinking of switching to a fixed deal, pay attention to any exit fees, which could cost between £25 and £150 per fuel. If you change your mind after the cooling-off period or spot a better deal you wish to switch to, you may need to pay to leave.
“If you’re not sure whether to opt for a fixed deal, perhaps consider a variable tariff, which often has no exit fees so you can switch away if a better option becomes available.
“There are some variable tariffs cheaper than the cap, so it’s worth running a comparison. For all deals, the price you are quoted to pay is an estimate based on your predicted usage.”
Debt charity StepChange warned that despite the drop in bills, many Britons are still struggling with high energy debts.
The group said average arrears for those using its service increased from £1,608 in January 2023 to £2,050 by the end of the year.
Richard Lane, chief client officer at StepChange, said: “The Government should continue support for low income households, as headline indicators like the price cap and inflation falling don’t reflect the reality for many of those struggling with energy costs.
“The upcoming Spring Budget is a crucial opportunity to help households move out of the red and onto a more sustainable footing.
“We need to see the Household Support Fund extended, which provides essential crisis support, alongside funding to write off energy arrears for those who cannot afford to pay.
“This should be followed by the introduction of a social tariff for energy as soon as possible to stop unaffordable bills driving debt among struggling households.”
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