Ofgem price cap: When energy bills are set to fall again - and will they keep going down?

The Ofgem price cap has finally fallen - but energy bills are still far higher than they used to be.

The average household with typical gas and electricity use currently pays £1,690 a year under the price cap, which was updated in April. But exactly how much you pay depends on where you live and how much energy you use - there is no total cap on how much you can be charged for gas and electricity.

The Ofgem price cap sets a limit on the unit price of gas and electricity, as well standing charges, which are fixed daily amounts you have to pay to be connected to the power network. The headline number is used to show what someone with typical energy usage can expect to pay.

Ofgem estimates the average household consumes 2,700 kwh of electricity and 11,500 kWh of gas over 12 months. Where you live also affects how much you pay, as there are regional variations in terms of unit rates and standing charges, and there are different rates for prepayment customers and those who pay on receipt of bill.

For direct debit customers, the average unit rate for gas is 6.04 per kilowatt hour (kWh) and the standing charge is 31.43p a day. The unit rate for electricity is 24.50p per kWh and the standing charge is 60.10p a day.

Will energy bills go down again?

The Ofgem price cap is updated every three months. The latest prediction from analysts at Cornwall Insight is that the price cap will drop to £1,560 a year from July. The next announcement for the July price cap is due on May 24.

But after this, Cornwall Insight is predicting slight rises again toward later this year. It expects the price cap to rise to £1,631 a year from October, then to £1,634 from January. However, there is still a way to go before these price caps would kick in - so predictions will change between now and then.

Ofgem take into account the cost of wholesale energy when working out its new price cap, as well as the cost of maintaining pipes and wires that carry gas and electricity, network and operating costs, as well as VAT, payment method allowances and profits for the energy supplier. Around 29 million households on a standard variable rate (SVR) tariff - so those who are not locked into a fixed rate deal - will be covered by the price cap.