Ofgem price cap falls to lowest level since March 2022 but millions will pay more this winter than last
Ofgem has announced the new energy price cap from October 1
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Ofgem has decreased the energy price cap to its lowest level since March 2022.
From October 1, the new price cap will drop to £1,923 for a typical household on a dual fuel tariff paying by direct debit, based on typical use.
Jonathan Brearley, Ofgem CEO, 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.
“That’s why we’ve introduced new measures to support consumers including reducing costs for those on pre-payment meters, and introducing a PPM code of conduct that all suppliers need to meet before they restart installation of any mandatory PPMs.
Ofgem's energy price cap decreased to £2,074 on July 1
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The CEO said there were "signs" the financial outlook for suppliers is stabilising and that "reasonable" profits are returning.
He added: "With the small additional allowance we’ve made to Earnings Before Interest and Tax (EBIT), this means there should be no excuses for suppliers not to be doing all they can to support their customers this winter, and to reinforce this we’ll be introducing a consumer code of conduct which we will look to have in place by winter.
"This code will ensure there are clear expectations of supplier behaviours especially for their most vulnerable consumers with whom suppliers should be reaching out proactively, with compassion and understanding. There are great examples of suppliers already doing this but I want to see this become the norm in such an essential sector that has such a big impact on people’s lives.”
The energy price cap decreased to £2,074 on July 1.
It was previously set at £3,280 from April this year, although customers were protected by the £2,500 energy price guarantee.
Despite the fall, millions of people in England will pay higher energy bills this winter compared to last, including almost half of poor families, a think tank has warned.
Although the price per unit of energy is coming down, the Resolution Foundation said this would be offset by a rise in the daily standing charge and the fact the government's £400 energy support scheme will not be repeated this winter.
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Ofgem's energy price cap was set at £3,280 from April this year, although customers were protected by the £2,500 energy price guarantee
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Jonathan Marshall, senior economist at the Resolution Foundation, said: “With these energy bill increases coming on top of a prolonged period of fast-rising food and housing costs, the cost of living squeeze is far from over.
"And, although Government schemes have improved their targeting of support throughout the crisis to those most in need, significant gaps remain which should be urgently addressed to help the most vulnerable get through the challenging months ahead.“In the longer term, the Government needs to reduce the UK’s dependency on gas, and improve the state of our home insulation, to prevent the winter energy crisis from becoming an annual occurrence.”
The energy price cap is the maximum amount energy suppliers can charge customers for each unit of energy on a standard variable tariff.
The amount consumers pay depends on actual household usage, as well as meter and payment type, so it may be people end up paying more than the aforementioned price cap figure.