Energy regulator Ofgem has slashed the energy price cap to £1,923 for an average household, but many households will likely be paying more than last year due to the rollback of Government support with energy bills.
Ofgem’s energy price cap limits the amount a supplier can charge per unit of gas or electricity to households in England, Scotland and Wales.
Under the new cap, Ofgem is cutting the price that a supplier can charge for gas from 6.9p per kilowatt hour (kWh) today to 6.89p from October 1. The price of electricity will fall from 30.1p per kWh to 27.35p.
This means that from October this year the average annual energy bill for a household paying direct debit is £1,923, while for an average pre-pay households it is £1,949, Ofgem said.
The new price cap comes down from the current cap of £2,074 and is the lowest figure since March 2022. However, the new average figure is not directly comparable to previous price caps as Ofgem has changed the way it calculates the average annual bill, which it said reflects lower energy consumption levels.
Last year the average family bill was £2,500 thanks to the Government’s Energy Price Guarantee Scheme, while households also got an additional £66 per month taken off their bill over winter due to other Government support.
This meant the average household was paying around £141 per month if they were on a direct debit plan.
Forecasts from energy consultant Cornwall Insight for this winter predicts that a household using the same amount of energy this winter would be paying around £160 per month.
While Ofgem’s new price cap is the lowest since March 2022, it still remains 50 per cent higher than two years ago.
And bills are expected to rise again in January because of a recent surge in global gas market prices.. Cornwall Insight said energy costs have hit a new normal and will stay close to currently levels until at least October next year.
Ofgem chief executive Jonathan Brearley said: “It is welcome news that the price cap continues to fall, however, we know people are struggling with the wider cost of living challenges and I can’t offer any certainty that things will ease this winter.”
The charity National Energy Action has warned that 6.3 million households could be trapped in fuel poverty this winter.
“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.”
Connor Schwartz, warm homes campaigner at Friends of the Earth, said “millions of people will be dreading another winter of struggling to afford their energy bills” despite the lowering of Ofgem’s cap.
He added: “People in the most vulnerable situations and those on lower incomes living in cold, heat-leaking homes, have months of hardship ahead, unless the government acts now to end our reliance on expensive, polluting gas and makes our energy system fairer and greener.”