Millions set to see energy bills drop - with announcement due next week
Millions of households are expected to see their energy bill drop from October, according to a new prediction released today ahead of a key announcement next week.
Cornwall Insight has forecast the Ofgem price cap could fall to £1,925.71 a year for someone with typical use - down from its current level of £2,074. This marks drop of almost £150 compared to its current figure.
This would be the second fall in bills for Brits since energy bills started to soar, so many will see this as a relief. However, the price cap is significantly higher than it was back in October 2021 when it sat at £1,277. Energy bills started to rise following the end of Covid lockdowns and wholesale prices were then exasperated by the Russian invasion of Ukraine.
Dr Craig Lowrey, principal consultant at Cornwall Insight said: “While a small decrease in October’s bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills. As many, including energy regulator Ofgem have acknowledged, it is essential that the Government explore alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.”
Natalie Mathie, energy expert at Uswitch.com. said: "If the cap is confirmed at this level, then the price of energy for the average household will be 7% lower during October, November and December — but these are some of the coldest months of the year and when households use more energy.
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“Despite another drop in rates, bills are still high when compared to pre-crisis levels, so households will still need to be mindful of their energy usage over winter."
The official price cap figure will be released by next Friday, August 25, and this will cover from October 1 until December 31. However, it is important to keep in mind that there is no actual cap you can pay for energy.
What the Ofgem price cap does, is it sets a limit on the unit rates you can be charged for gas and electricity, as well as the standing charges. The headline figure Ofgem provides is used to describe someone with typical use - so your energy bills may be higher or lower than this.
To confuse matters, Ofgem is changing the way it calculates its price cap under "typical use" due to Brits lowering their usage since the start of the energy crisis.
The new method is to be brought in from October and will be used to calculate the January price cap figure. From then, the typical use for electricity figure will be 2,700 kWh per year - down from 2,900 kWh. The typical use for the gas figure will be 11,500 kWh per year down from 12,000 kWh.
Using the new calculations for the October figure, the new price cap would sit at £1,823.89. This would be £250 lower than the current July price cap.
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