Gas and electricity bills are on track to fall by a sixth this year – saving £370 – but the legacy of the energy shock still casts a long shadow

Summer energy bills will fall to their lowest level since the beginning of 2022 as a result of the latest Ofgem price cap for July to September 2024 falling to £1,568. But the legacy of a 60 per cent rise in average energy bills in 2024 compared with three years ago still casts a long shadow over household finances, the Resolution Foundation said today (Friday).

The Foundation notes that overall energy bills are currently expected to be a sixth (or £370) lower in 2024 than in 2023. This welcome fall represents an average bill saving of £350 for the poorest fifth of households, and £400 for the richest fifth (as they consume more energy).

However, cheaper energy in the summer months – the period covered by the latest price cap – is less important for living standards than that during the winter. Analysis of 2023 household smart meter data shows that just 6 per cent of gas use takes place between July and September. In contrast, 44 per cent of gas consumption occurs in the first quarter of the year and 35 per cent happens between October and December. Levels of electricity consumption across the year are much more consistent.

The Foundation adds that the legacy of the energy-driven inflation shock continues to cast a shadow over household finances.

A typical annual household energy bill is expected to be 60 per cent (or £670) higher this year than in 2021 and has left families paying more for less, with real household energy consumption falling by 11 per cent between the first quarter of 2022 and the end of 2023. The latest Government survey shows that more than six in ten (62 per cent) of families are still worried about paying for energy bills.

Emily Fry, Senior Economist at the Resolution Foundation, said:

“Energy bills more than doubled in the wake of Russia’s invasion of Ukraine, and deepened the cost-of-living crisis across Europe. Households will be relieved to see the energy price cap fall once again to below £1,600, with households spending £370 less for energy this year than last.

“However, the shock has left households paying more for less energy, with more than six in ten households still worried about paying their bills. And with the majority of gas consumption taking place in winter, it’s the winter price cap that matters most for living standards.”

Notes to Editors

Forecast energy savings in 2024 use Cornwall Insight estimates for the Q4 2024 price cap.