In response to a continued decline in wholesale energy prices, Ofgem has made the decision to adjust the price cap to £1,923 starting in October.
The charge for gas is set to drop from the current 6.9p per kilowatt hour (kWh) to 6.89p, effective October 1st. Simultaneously, the cost of electricity will also see a drop, from 30.1p per kWh to 27.35p, as stated by Ofgem.
This adjustment means the approximate annual household bill will drop to £1,923, based on calculations by the regulator. For prepayment meter users, the average cost is estimated to be £1,949. However, it’s important to recognise that the cap is based on a per-unit charge model, implying that households with higher energy consumption will still witness higher bills.
Ofgem’s calculations rest on the premise that an average household uses 2,900 kWh of electricity and 12,000 kWh of gas.
Jonathan Brearley, Ofgem’s Chief Executive, expressed his approval for the declining price cap while acknowledging that the broader challenges of cost of living persist. “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.”
Labour’s Shadow Energy and Net Zero Secretary, Ed Miliband, critiqued the Conservative government’s approach, saying “higher energy bills are unfortunately here to stay under the Conservatives – even with this fall, bills are significantly higher than they were only three years ago.
“The problem is the Tories have learnt no lessons from this crisis. They continue to side with the oil and gas companies making record profits over hardworking British families, with their refusal to fix the gaping loopholes in the windfall tax or make the sprint we need for clean power, keeping the onshore wind ban and failing to insulate homes.”
