A typical household’s yearly energy bill will fall by £122 in July under the regulator Ofgem’s new price cap.

The latest quarterly cap for England, Wales and Scotland means a household using a typical amount of gas and electricity will pay £1,568 a year.

That is down on the current level of £1,690 a year and is the lowest for two years.

The cap sets a limit on the maximum price that can be charged for each unit of gas and electricity – not the total bill.

That means if you use more energy, you will pay more.

It affects the gas and electricity bills of 28 million households, but does not impact customers in Northern Ireland, where the sector is regulated differently but where prices are also falling.

Specifically, in England, Wales and Scotland:

• Gas prices will be capped at 5.48p per kilowatt hour (kWh), and electricity at 22.36p per kWh
• A typical household uses 2,700 kWh of electricity a year, and 11,500 kWh of gas
• Households on pre-payment meters will pay slightly less than those on direct debit, with a typical bill of £1,522
• Those who pay their bills every three months by cash or cheque will pay more, with a typical bill of £1,668
• Standing charges – a fixed daily charge covering the costs of connecting to a supply – are unchanged at 60p a day for electricity and 31p a day for gas, although they vary by region

Energy prices are at their lowest level since Russia’s invasion of Ukraine in February 2022. However, bills remain well above pre-pandemic levels.

A typical annual bill is about £500 lower than last summer, but about £400 higher than three years ago.

Those on prepayment meters, who tend to top up meters during the colder, darker months will see less immediate impact of a summer drop in prices, following the previous fall in April.

The vast majority of households pay by direct debit, and their payments are smoothed out over the year. They can expect more information from their supplier in the coming days about any price changes.

Suppliers will judge the level of direct debit on previous, and future predicted, usage. Customers can challenge any, or no, change by talking initially to their energy provider.

Falling energy bills have already helped push inflation down to its lowest level in almost three years. Further declines would continue to feed through to the inflation rate, and may create more impetus for the Bank of England to reduce interest rates.

Ofgem is also gathering views on the way the price cap is calculated, including whether there should be a change to standing charges.

These are the fixed daily charges covering the costs of connecting to a supply, which have risen sharply in some areas.

Experts have shared three tips to keep on top of energy use during the warmer months:

• If your hot water is too hot to wash your hands in, then your setting is too high so turn the boiler down
• Manage your draughts, such as putting a black bag with scrunched up paper up an unused chimney, or limit other draughts around the home
• Limit time in the shower to four minutes. The charity WaterAid has compiled a playlist of four-minute songs to keep you to time

Read more here if you are struggling to pay energy bills