Ofgem today announced the latest price caps as households prepare to see their energy bills fall to their lowest level in more than two years.

From April 2024, the reduction will be £1,690, with the average reduction for dual-fuel households being £238.

The change takes effect from today and will last for three months until the end of June.

Here’s everything you need to know about what the announcement means for you and your bill:

What is Ofgem’s energy price cap?

An energy price cap is the maximum amount an energy supplier can charge households per unit of energy on a standard variable electricity price.

This is no The maximum energy bill that can be charged in a year, nor is it a fixed rate. Instead, it shows the average amount a household can expect to pay if their energy consumption is “typical”.

In effect, a price cap corresponds to the maximum amount a supplier can charge on a per-kilowatt-hour or daily fixed basis. What you actually pay depends on where you live, how you pay your bill, and the type of meter you have.

The government introduced price caps in 2019 to ensure energy bills accurately reflect the cost of energy. Updated every three months.

Why did the energy price cap fall?

Energy price caps are calculated based on wholesale energy prices. This is the amount energy suppliers pay before supplying gas and electricity to households, and it has begun to fall steadily in recent months.

Energy consultancy Cornwall Insight has built a reputation in recent years for its near-accurate forecasts of upcoming changes to energy price caps. They take into account a range of factors to make their forecasts, including wholesale energy prices and Ofgem’s own methodology.

While the reduction in the energy price cap is good news for those struggling, it is still almost £500 higher than when the cap was introduced in January 2019.

Is there any way to save more on electricity bills?

While the energy price cap remains firm – with suppliers rarely charging below it in recent years – there is still some possible wiggle room.

Martin Lewis revealed that the E.ON Next Pledge variable tariff will provide all customers with prices 3% below the price cap. This means you can take advantage of the discount whether the price cap goes up or down.

Some energy providers also offer grants to those struggling to pay their energy bills. These include Scottish Power, EDF, E.ON and Octopus. It’s worth contacting your energy provider to find out if you qualify. British Gas is also offering grants of up to £2,000 to customers of any energy provider.