Starting this weekend, millions of households will enjoy a decrease in energy rates as the Ofgem price cap drops to £1,923 per year for the average home. However, to ensure accurate billing, it’s crucial to provide your energy company with meter readings before the price cap increases on October 1.
The Ofgem price cap restricts the amount you can be charged for gas and electricity if you have a variable-rate tariff and pay by direct debit.
Downwards: The price cap has reduced significantly compared to last winter
Nearly all UK households currently have energy bills restricted by the Ofgem price cap, which currently averages £2,074 and will decrease by £151 starting October 1.
The price cap is set quarterly by regulator Ofgem, with the next decision due in January 2024.
Discover how the October 1 price cap changes will impact your energy bills.
How Does the Price Cap Affect My Energy Bills?
The impact varies based on your tariff, meter type, and energy usage.
Until October 1, the average household on a variable-rate tariff with direct debit payment will pay £2,074 per year or £172 per month due to the price cap. After October 1, this bill will decrease to £1,923.
According to Ofgem, this reduction is attributed to the declining wholesale energy prices that companies like British Gas purchase and sell to consumers.
However, the amount you pay will depend on your energy consumption. The price cap limits the maximum charge for the units of gas or electricity you use.
As winter approaches and households across Britain prepare to switch on their heating, those with higher energy usage will pay more, while those with lower usage will pay less.
How Does Your Meter Impact Your Energy Bills?
For customers using pre-payment meters, the average price cap will decrease from £2,077 to £1,949 in October.
Customers with credit meters currently pay an average of £2,211, which will decrease to £2,052 starting October 1.
Economy 7 meter users are currently subject to a price cap of £1,400 for electricity usage, which will drop to £1,298 in October.
Homes that consume more than £3,000 of energy annually have their bills capped by the Government’s Energy Price Guarantee.
This government scheme partially covers consumer gas and electricity bills. It was initially set at £2,500 in October 2022 and was raised to £3,000 in July 2023.
How Does the Price Cap Affect Standing Charges?
The Ofgem price cap also regulates standing charges.
The standing charge amount varies depending on factors like your location.
For electricity, the average standing charge remains at 53p per day and will not change on October 1.
As for gas, the typical standing charge will increase by 1p to 30p.
Submit a Meter Reading This Week
Providing your energy company with a meter reading before October 1 is essential as it ensures accurate billing for the period from October 1 to December 31. Without a meter reading, your energy company will estimate your bill, which may not be entirely precise unless you have a smart meter.
It is especially crucial to provide an up-to-date meter reading before the price cap increases or decreases to avoid overcharging or unexpected bills. Having a meter reading guarantees certainty regarding your energy bill amount.
What Does the Future Hold for Energy Bills?
Ofgem does not make predictions about future price cap changes. However, chief executive Jonathan Brearley has cautioned customers that “I can’t offer any certainty that things will ease this winter.”
Nevertheless, Cornwall Insight, an energy analysis firm, consistently provides accurate energy bill price predictions. According to Cornwall Insight, the typical household will pay £2,032 starting January 1, which will decrease to £1,964 in April, £1,917 in July, and then rise to £1,974 in October next year.
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