Ofgem to slash energy price cap for households in England, Wales and Scotland
Despite the fall, bills are still likely to be higher this winter than in 2022 due to the lack of government support. ITV News' Chloe Keedy reports
Ofgem is lowering its energy price cap from the current £2,074 per year to £1,923 for the average household in England, Wales and Scotland.
The changes to the cap - which limits the amount a supplier can charge per unit of gas or electricity they sell - will come into effect from October 1, the regulator has announced.
But despite the £151 price drop, people are likely to see higher monthly fuel bills this winter.
Last winter the average household energy bill was £2,500 per year, thanks to the government’s Energy Price Guarantee scheme.
Households were also getting £66 per month taken off their bills by the government.
The average household therefore would be paying around £141 per month after the discount over the winter months if they were on a direct debit payment plan.
If the forecasts are accurate, households using the same amount of energy this winter will be paying around £160 per month.
In numbers
Gas will fall from 7.5p per kilowatt hour (kWh) today to 6.9p
Electricity will fall from 30.1p per kWh to just under 27p
This means average annual energy bills will fall from £2,074 today to £1,926
The price cap will be the lowest since March 2022
It is around 50% higher than the price cap two years ago
Figures according to energy consultants Cornwall Insight
Bills are expected to rise again in January, wiping out the gains made in this price cap.
Forecasters at Cornwall Insight expect that bills have hit something of a new normal and will stay close to current levels until at least October 2024.
It has caused charity National Energy Action (NEA) to warn that 6.3 million households could be trapped in fuel poverty this winter.
It is somewhat less than last year, but far ahead of the 4.5 million in October 2021.
“The price cap does not protect those who simply cannot afford the cost of keeping warm,” said NEA chief executive Adam Scorer.
“The UK government can still act – by directly reducing energy bills via targeted energy discounts or a more targeted Energy Price Guarantee for low-income and vulnerable households.
“It knows how to do it. It has millions of pounds unspent from previous schemes. It is aware that failing to act will consign millions to another winter of despair and suffering.”
What is the price cap and why does it keep changing?
It is intended to protect against overcharging by limiting the amount that suppliers can charge for each unit of gas and electricity - measured in kWh (kilowatt hours).
A price cap does not mean a cap on your total energy bill.
It is a cap on how much suppliers can charge for each kWh of energy used, together with a maximum daily standing charge.
Your bill will go up or down depending on how many units (i.e. how much energy) you use.
The price cap can vary depending on where you live, how you pay, and what type of meter you have.
Ofgem changes the cap every three months to reflect changes in cost of living as well as inflation.
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