Most people in England, Scotland and Wales will see their energy bills fall by more than 12% from April.
Energy regulator Ofgem has announced new price caps that will set the maximum price that suppliers can charge for each unit of gas and electricity used in homes.
What is the upper limit on energy prices?
Energy price caps are set every three months and affect 29 million households in England, Wales and Scotland.
This fixes the maximum price that can be charged per unit of energy at the standard or default rate for a typical dual-fuel household paying by direct debit.
Gas prices will be capped at 6p per kilowatt hour (kWh) and electricity at 24p per kWh. Gas currently costs 7.42p per kWh and electricity 28.62p per kWh.
When prices soared after Russia invaded Ukraine in 2022, the government introduced temporary energy price guarantees to limit bills. However, responsibility for deciding how much customers can be charged still rests with Ofgem.
This cap does not apply to Northern Ireland, which has its own energy market. Prices are falling there too.
How much could my bill go down?
From April, the average household paying for Dual Fuel by direct debit will pay £1,690 a year, £238 less than the previous limit, Ofgem said.
Should energy prices be fixed?
Falling energy prices have raised hopes that suppliers will offer cheaper fixed-price deals.
These provide certainty for a period of time, but if prices fall further, people can become stuck at the highs.
Analysts at Cornwall Insight expect price ceilings to fall slightly in July, but rise slightly in October.
When considering fixed-price trading, Ofgem says you should seek independent advice and “consider what's most important to you: the lowest price or the security of fixed-price trading”.
Price comparison website USwitch says it expects “increased competition” from suppliers, but warns customers should check the cancellation fees they will have to pay if they end their fixed-term contracts early. .
What is the resident fee?
Although the overall cap has been lowered, the standing charge (a fixed daily amount that covers the cost of connecting to a power source) has increased.
Permanent charges are 60p a day for electricity and 31p a day for gas, depending on the region.
The regulator will also add £28 to everyone's bills over a year to cover the cost of dealing with the £3.1bn debt customers owe to suppliers.
What is a typical household?
The amount you pay for your energy bill depends on the total amount of gas and electricity you use.
However, the type of property you live in, its energy efficiency and the number of people living there will also affect your bill.
Ofgem's caps are based on a “typical household” using 11,500 kWh of gas and 2,700 kWh of electricity a year and paying by direct debit.
The majority of people pay their bills this way to spread out payments throughout the year.
Those who pay by cash and check every three months will be charged more. His normal annual bill from April will be £1,796, which is £106 a year more than a direct debit customer.
What is happening to prepaid customers?
Households using prepaid meters will pay the same rate as households using direct debit. Previously we were charged more.
According to Ofgem, as of July 2023, around 4 million households had installed prepaid meters.
Many have been in place for years, but some were installed more recently after customers had trouble paying their bills.
The new rules mean suppliers must offer customers more opportunities to clear their debts and cannot be installed in certain homes.
What kind of support is available for utility bills?
Certain groups, such as pensioners and people receiving means-tested or disability benefits, received additional living costs payments when their bills rose.
However, much of that additional support has now ended.
The £500m Household Support Fund, introduced by the government in September 2021 to help with costs, will end in March 2024.
However, the Warm Home Discount scheme will continue to offer discounts to eligible pensioners and low-income households.
The government's Direct Fuel Scheme helps pay down debt through benefit payments.
In addition, energy suppliers should offer affordable payment plans and forbearance if customers are struggling to pay their bills.
Most suppliers also offer hardship grants.
What support are businesses receiving?
The Corporate Energy Support Scheme, which provides businesses with discounts on wholesale prices, will end in March 2024.
The scheme offered larger discounts to energy-intensive sectors such as glass, ceramics and steel manufacturers.
