Households will be paying considerably less for their energy come April – with a typical bill set to fall by more than £230 a year.

Prices for gas and electricity are dropping for domestic customers thanks to a reduction in the energy price cap.

For an average-sized household, using a typical amount of energy, this change would take a yearly bill from £1,928 to around £1,690 – a saving of around £20 a month.

Costs controlled by the energy price cap are reassessed every three months by regulator Ofgem to ensure customers are paying prices reflective of wholesale charges.

Ofgem said the reduction will mean prices will reach their lowest level since Russia’s invasion of Ukraine in February 2022, which caused a sudden spike in an already turbulent energy market and sent bills rocketing for homes and businesses.

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.”

Ofgem has announced it is allowing a temporary additional payment of £28 a year – or £2.33 a month – to make sure companies have enough money to support customers who are struggling.

This will be added to the bills of customers who pay by direct debit but will be partly offset by the end of an allowance worth £11 per year that covered debt costs connected to the pandemic.

Thanks to a relatively mild winter European gas stocks remain at higher than expected levels for the time of year. This, combined with fairly healthy supply conditions, has seen wholesale prices fall steadily since November.

And in a possible second bout of good news – predictions for the rest of 2024 suggest charges could remain lower than current prices – falling to £1,497 a year in July, before rising just slightly to £1,541 in October according to forecasts by Cornwall Insight.

While charities have welcomed the news of a fall in April, they say the impact of high charges will be felt by many for ‘years to come’.

Citizens Advice estimates that five million people live in homes which have fallen behind on their energy bills – money they say cash-strapped households will struggle to pay back.