Charity workers and MPs in the North East have welcomed news that average household energy bills are to fall - but caution that people are still "very much feeling the pinch".

The were responding to Ofgem's announcement it is lowering its price cap in response to wholesale prices with bills expected to fall the lowest point in two years from April.

The regulator announced it is dropping its price cap by 12.3 per cent from the current £1,928 for a typical dual fuel household in England, Scotland and Wales to £1,690, a drop of £238 over the course of a year or around £20 a month.

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.The Northern Echo: Stockton North MP Alex Cunningham Stockton North MP Alex Cunningham (Image: PA MEDIA)

Stockton North Labour MP Alex Cunningham said: "This is good news for consumers, but energy £bills remain significantly higher than where they were two years ago with working families still very much feeling the pinch.

"This is also only one element of the cost-of-living crisis, with many other parts of household spending still incredibly high.

"Government promised more help to deal with energy bills which is yet to be seen before the Spring. Despite this reduction, the Government must act to support the most vulnerable in society who still will not be able to afford their bills."The Northern Echo: East Durham Trust manager Lindsey Wood East Durham Trust manager Lindsey Wood (Image: LEC)

Peterlee-based East Durham Trust manager Lindsey Wood said: "Any sort of decrease is helpful, you can't deny that.

"But the one thing we are aware of is that just in January alone our crisis service was supporting up to 90 people -  or 45 to 45 people every day - that is the level of need that we've been experiencing as an organisation.  

"We have seen some of that taper off due to cost of living payments, which has given a little bit of additional support financially, meaning they don’t need that crisis intervention.

"But we we still have raised food prices and interest rates - although they are coming down. Household budgets are still under pressure." 

She added: "In January six out of ten people who came to us for help have never needed help before.

"So its people from different households that need our support including people who are in work or have two income households. It’s not necessarily people who out of work or claiming benefits.

"When we see on the news about huge profit of energy companies are making, that real sticks when we are giving people support to purchase their gas."The Northern Echo: Darlington MP Peter GibsonDarlington MP Peter Gibson (Image: Contributor)

Darlington's Conservative MP Peter Gibson said: "The news that the price cap is being lowered will be celebrated by households right across Darlington as we continue to work to reduce inflation and cut the cost of living."

Ofgem chief executive Jonathan Brearley said: “This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis – but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.

“That’s why we are levelising standing charges to end the inequity of people with prepayment meters, many of whom are vulnerable and struggling, being charged more up-front for their energy than other customers.

“We also need to address the risk posed by stubbornly high levels of debt in the system, so we must introduce a temporary payment to help prevent an unsustainable situation leading to higher bills in the future. We’ll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which we’ll be announcing soon.

“These steps highlight the limitations of the current system – we can only move costs around – so we welcome news that the Government is opening the conversation on the future of price regulation, seeking views on how standard energy deals can be made more flexible so customers pay less if using electricity when prices are lower.

“But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall. As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”

Ofgem announced it is allowing a temporary additional payment of £28 a year, or £2.33 a month, to make sure suppliers have enough funds to support customers who are struggling.

This will be added to the bills of customers who pay by direct debit or standard credit and is to be partly offset by the end of an allowance worth £11 per year that covered debt costs related to the Covid pandemic.

Prepayment meter customers will not have to pay the extra charge, as many do not build up the same level of debt as credit customers because they top up as they go, Ofgem said.

The regulator also confirmed plans to set a permanent solution to prepayment customers paying higher standing charges, which was removed by the Government’s temporary Energy Price Guarantee.

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Ofgem said the solution must be funded by bill-payers rather than taxpayers, to maintain fairness, meaning prepayment customers will save around £49 per year while direct debit customers will pay £10 more each year.

Citizens Advice chief executive Dame Clare Moriarty said: “It’s good news that the cost of energy is falling, but the impact of sky-high prices will be felt for years to come.

“We know more than five million people live in households behind on their energy bills and, with the price of energy still far higher than just three years ago, many people will struggle to pay off these debts."