Power bills are unlikely to fall below pre-crisis levels until at least the middle of the decade, the head of Britain’s power regulator warned on Thursday.

Jonathan Brearley’s comments came as he announced that the energy price cap, which usually determines how much a typical household pays, would be lowered from £3,280 to £2,074 from July.

The sharp drop reflects a drop in wholesale market prices in recent months, helped by relatively mild weather and energy-saving efforts in Europe. However, the new cap remains more than 60 percent above the level of late 2021, when wholesale energy prices rose in the run-up to Russia. invasion of ukraine.

Brearley said he hoped electricity and gas prices would not fall much further “in the medium term.” When asked to clarify the time frame, an official said Brearley was referring to “at least two years.”

As wholesale power prices soared last year, the cap, which Ofgem revises every quarter, peaked at £4,279 in January, up from £1,277 in October 2021. Once the cap falls below that level, most support for households will end, meaning the average annual bill will fall by £426 from July.

“People should start seeing cheaper energy bills from the beginning of July, and that’s a welcome step towards lower costs,” Brearley said, but added: “Over the medium term, we’re unlikely to see prices return to the levels we saw. before the energy crisis.

He said the regulator, government and industry needed to work on more support for vulnerable households.

The government has ended universal financial support for households to offset sharply rising energy bills, although those on certain social benefits are due two more payments of £300 before they end in spring 2024.

Citizen’s Advice said the government should consider extending the aid, warning that the continued high cost of gas and electricity was putting pressure on households struggling with the broader impact of high inflation on their budgets.

“For many, life is getting worse, not better. Year after year, we break records for the number of people battling energy debt. It is clear that more government support will be needed in the future for struggling households,” she said.

Adam Scorer, chief executive of the energy poverty charity National Energy Action, agreed. “More than two and a half million low-income and vulnerable households no longer receive any support from the government for unaffordable bills. For them, the energy crisis is far from over, ”he said.

Energy UK, a trade group representing energy retailers, has warned that a price cap above £2,000 would become the “new normal” and backed calls for targeted support for low-income households next winter.

“We must also press ahead with expanding our own domestic and clean energy sources and making our homes more energy efficient,” he added, “as this will help reduce energy costs permanently for all customers. ”.

Chancellor Jeremy Hunt told Sky News he was “willing to do whatever it takes” and step up support for households if power bills rise again this autumn, though he added he did not expect there to be a big rise in price. maximum.

Cornwall Insight, the consultancy, forecasts the top price to drop to £1,960 in October, rising slightly to £2,026 next January.

Under the July cap, the unit cost of electricity will fall from 51 pence per kilowatt-hour to 30 pence and the unit cost of gas from 13 pence to 8 pence.

Ofgem also announced that it planned to allow providers to increase their profit margin for capped accounts to 2.4 percent from 1.9 percent. The proposal, which is in consultation until the end of June, is expected to add around £10 to the average October bill.

Ofgem said the move was needed to boost financial resilience after it tightened rules on provider finances following a series of collapses in late 2021.

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