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Household energy bills are set to fall to their lowest point in two years, with Ofgem announcing it will lower its price cap by 12.3 per cent.

The regulator’s new price cap, which will come into effect in April, will see the average household gas and electricity bill fall from the current £1,928 in England, Scotland and Wales to £1,690 – a drop of around £20 a month, or £238 a year.

Ofgem said the drop would see energy prices reach their lowest level since Russia’s invasion of Ukraine in February 2022, which caused a spike in an already turbulent wholesale energy market, driving up costs for suppliers and customers.

While this is considerably lower than the record high of £4,059 for an average bill in early 2023, prices still remain well above the average of £993 which households were paying two years prior.

So with bills still nearly double what they were three years ago, and turbulence in Ukraine and the Middle East liable to keep wholesale prices high, what are the major parties proposing to help households with the cost of energy?

The Conservatives

While the government has sought to shield households from some of the most severe price rises with its Energy Bills Support scheme, which provided a £400 discount, but came to an end last June.

To help fund this, ministers had implemented a windfall tax on the profits of fossil fuel companies, after facing mounting pressure to do so. Ministers said last June the tax had raised more than £2.8bn, and saved a typical household nearly £1,500 on energy bills.

But experts warn that the government’s tax relief loophole for new North Sea projects has made it cheaper for companies to extract harmful fossil fuels.

In October, the government’s Energy Act also received royal assent, which the government says incentivises the energy industry to invest in low-carbon heat pumps, and includes powers to deliver a planned smart meter rollout by 2028, which ministers claim could save households £5.6bn.

The new legislation also expands Ofgem’s remit, allowing the regulator to set rules on excessive energy pricing and adds a specific mandate for it to support the government meet its legal obligation to get to net zero by 2050.

It was also reported by Politico this week that the government is mulling plans which would hike household energy bills to help pay for a new £20bn nuclear energy plant in Suffolk, Sizewell C.

Labour

While energy policy has been a key plank of Labour’s offering in recent years, Sir Keir Starmer has drastically scaled down his party’s plans by ditching a policy of spending £28bn a year on environmental projects.

The party’s plans to cut energy bills by giving 19 million people warmer homes in a decade could now take up to 14 years to achieve, Sir Keir said earlier this month – with Labour now promising to insulate only 5 million properties by 2030.

The party is now set to spend £23.7bn over the course of the next five-year parliament, on top of the £10bn a year it says the government has already committed to.

Labour has also pledged to enforce a “proper” windfall tax on energy companies, matching the rate imposed by Norway, which it claims would raise £10.8bn over five years, earmarked for green investment.

Sir Keir has previously pledged to create a new publicly-owned body called Great British Energy, which would invest in clean energy, including “by making the UK a world leader in floating offshore wind”.

Labour claims its plans would take hundreds of pounds off annual household energy bills, and would “rebuild Britain’s industrial strength by creating half a million new jobs.