Ofgem slashes energy price cap to £1,923

Ofgem, the energy regulator, has announced a reduction in the price cap on energy bills to £1,923 following a decrease in wholesale energy prices.

Starting from October 1, the price that suppliers can charge for gas will be reduced from 6.9p per kilowatt hour (kWh) to 6.89p. Additionally, the price of electricity will fall from 30.1p per kWh to 27.35p, according to Ofgem.

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According to Ofgem's calculations, the average annual household bill will be around £1,923, while customers with prepayment meters will pay an average of £1,949. However, the cap is based on a per unit charge, meaning that households that consume more energy will still pay higher bills.

Energy consultancy firm Cornwall Insight had anticipated an even greater decrease, with gas expected to fall to 6.9p and electricity to under 27p.

Ofgem's chief executive, Jonathan Brearley, stated:

"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 reduction in the cap initially seems like positive news for millions of households.

However, last winter, the cap was effectively superseded by the Government's Energy Price Guarantee, which ensured that the average household's bills remained at £2,500.

Furthermore, the UK Government provided an additional £66 per month towards each household's energy bills during that period.

This support will not be available this winter, resulting in many households paying more each month than they did last year. Brearley emphasized that now that energy prices are decreasing, Ofgem has permitted suppliers to earn slightly more from their customers.

He also mentioned the introduction of a consumer code of conduct, which will be implemented by winter to encourage suppliers to support their customers during this challenging period.