The energy price cap in Great Britain will fall 7% to the equivalent of £1,568 a year this summer after a drop in wholesale gas prices.

Set by the energy regulator Ofgem, the cap reflects the average annual dual-fuel bill for 29m households and takes effect from July until the end of September.

Set quarterly, the cap will fall by £122 in July from its current level of £1,690, about £500 less than the cap a year earlier, easing the pressure on household finances. However, the cap is more than £400 more than it was three years ago, before the energy crisis.

The energy security secretary, Claire Coutinho, seized on the fall in the price cap as evidence that the pressure on household spending was easing in the run-up to the general election.

She also claimed that Labour’s plans for a state-owned Great British Energy company, focusing on renewables, would “hike your bills and raise your taxes”.

But the shadow energy security secretary, Ed Miliband, said: “Only Rishi Sunak’s Conservatives could look at energy bills still being hundreds of pounds a year higher than before the crisis and call it good news.”

The fall in the cap leaves bills more than £400 higher than the £1,154 level in the summer of 2021. Wholesale gas prices began to rise sharply that year and soared after Russia’s full-scale invasion of Ukraine in early 2022.

Bills have since eased from their peak in 2023 – when the cap reached £4,279 but the government subsidised bills to keep them at £2,500. Yet they remain above pre-crisis levels, meaning millions of households are expected to remain in fuel poverty.

The chief executive of Citizens Advice, Dame Clare Moriarty, said: “Today’s news will give small comfort to households still facing cost of living pressures. The fall in the energy price cap reduces bills slightly, but our data tells us millions have fallen into the red or are unable to cover their essential costs every month.

“People cannot rely on lower energy prices alone to escape the financial issues they’ve been experiencing. That’s why we need better targeted energy bill support for those really struggling to keep the lights on or cook a hot meal.”

Jess Ralston, an energy analyst at the non-profit Energy & Climate Intelligence Unit, said: “Households are still struggling with bills that are hundreds of pounds higher than pre-crisis levels, and estimates suggest bills may rise again as we head into winter.

“Whatever colour the next government is, we’ll be heading into a winter still heavily dependent on volatile gas markets, going backwards on our energy independence. The cost of living, driven in part by energy bills, and the UK’s energy security may well be key election issues – so how the parties choose to tackle them will likely be in the spotlight.”

The price cap is expected to rise slightly in October before falling again in January 2025, according to analysis by the consultancy Cornwall Insight. It had forecast July’s cap would be £1,574 a year.

Ofgem changes the cap every three months based on several factors, the most important of which is the price of energy on wholesale markets.

The cap does not limit a household’s total bills, people still pay for each unit of gas and electricity they use: the figures provided are just for an average-use household.

Anyone on a pre-payment meters will pay slightly less than those on direct debit, receiving 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 are unchanged at 60p a day for electricity and 31p a day for gas, although they vary by region.

Within 24 hours of calling a general election, the Conservatives set out plans to make it easier for consumers to switch energy supplier such as simplifying price comparison sites and Ofgem publishing league tables that rank companies by their handling of customer complaints.

Labour has said it will increase energy security by setting up a publicly owned renewables business called Great British Energy, to invest in clean UK power.