Energy bills to fall slightly from October for the typical household
Energy bills to fall slightly from October to £1,923 a year for the typical household, Ofgem announces
- Ofgem is lowering its energy price cap from the current £2,074 per year
Energy bills will fall slightly from this autumn to £1,923 a year for the typical household, Ofgem has announced.
Ofgem is lowering its energy price cap from the current £2,074 per year for the average household in England, Wales and Scotland, effective from October 1.
The cap limits the amount that a supplier can charge per unit of gas or electricity they sell.
The energy regulator said it was cutting the price that a supplier could charge for gas from 6.9p per kilowatt hour (kWh) today to 6.89p from October 1. The price of electricity will fall from 30.1p per kWh to 27.35p.
Ofgem chief executive Jonathan Brearley 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.’
Energy Security Secretary Grant Shapps described the news as ‘encouraging’ but Labour has said the £1,923 cap demonstrates the ‘Tory cost-of-living crisis is still raging for millions of people’ as despite the drop ‘bills are significantly higher than they were only three years ago.’
Now that higher energy costs seem to be here to stay for the medium term, experts say the best way to reduce bills is to reduce the amount of energy that people need (stock image)
Mr Shapps said: ‘It’s encouraging families will see their energy bills continue to fall from October, down £580 on average since their peak – another milestone as we deliver on our promise to halve inflation.
‘We acted swiftly when prices soared because of Putin’s abhorrent attack on Ukraine, spending billions and covering around half a typical household’s bill.
‘And we are successfully driving Putin out of global energy markets so he can never again hold us to ransom, and we are boosting our energy independence to deliver cheaper, cleaner and more secure energy to British homes.’
But shadow climate change secretary Ed Miliband said: ‘These figures demonstrate the scandalous Tory cost-of-living crisis is still raging for millions of people. 13 years of failed Tory energy policy has left Britain as the most exposed economy in Western Europe to the effects of (Vladimir) Putin’s war and Britain’s families and businesses are paying the price.
‘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 hard-working 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.
‘Labour would act to close loopholes and bring in a proper windfall tax on oil and gas giants to help tackle the cost-of-living crisis, alongside our plan to make Britain a clean energy superpower so we can lower bills for families and businesses.’
Because the cap decides the per unit charge, households that use more will pay more.
This is based on an estimate that the average household uses 2,900 kWh of electricity and 12,000 kWh of gas.
UK Government of the Secretary of State for Energy Security and Net Zero, Grant Shapps, during a visit to a Ukrainian power station on Tuesday
Commenting on Ofgem’s latest price cap announcement, Greenpeace UK’s climate campaigner, Georgia Whitaker, said bill-payers are sick to death of yo-yoing gas prices that still remain stubbornly high.
Read more: High energy bills risk the closure of 100,000 small businesses – as British Gas’s parent company celebrates huge profits
‘Renewables are consistently the cheapest, cleanest form of power there is – making them the backbone of our energy system must be the priority.
‘The government harps on about energy security and reducing fossil fuel imports but new renewable projects – the only way to truly achieve this and lower bills – are grinding to a halt thanks to insufficient subsidies and a lack of political will.
‘As well as a huge increase in wind and solar power, we urgently need a nationwide scheme to insulate homes and switch boilers for heat pumps. This would make homes warmer, allow them to use less energy and get bill payers off eye-wateringly expensive gas, once and for all.
‘Fossil fuels got us into this mess, climate solutions can get us out. But the fact that our government is doubling down on oil and gas, ditching green policies and failing to insulate homes, shows you where its priorities lie.’
Jonathan Marshall, senior economist at the Resolution Foundation, had earlier said: ‘More than one in three households across England will be shocked to discover that their energy bills could actually be higher this winter than last winter.
‘This increase will be particularly acute for England’s poorest families, a quarter of whom will spend at least £100 more on energy bills this winter compared to last year.’
‘The price cap does not protect those who simply cannot afford the cost of keeping warm,’ said NEA chief executive Adam Scorer.
‘The UK Government can still act – by directly reducing energy bills via targeted energy discounts or a more targeted Energy Price Guarantee for low-income and vulnerable households.
‘It knows how to do it. It has millions of pounds unspent from previous schemes. It is aware that failing to act will consign millions to another winter of despair and suffering.’
Last winter the average household energy bill was £2,500 per year, thanks to the Government’s Energy Price Guarantee scheme.
Households were also getting £66 per month taken off their bills by the Government.
The average household therefore would be paying around £141 per month after the discount over the winter months if they were on a direct debit payment plan.
Ofgem has also updated the way it calculates the average annual bill. It now thinks the average household consumes around 500 kWh of gas and 200 kWh of electricity less than it used to.
Now that higher energy costs seem to be here to stay for the medium term, experts say the best way to reduce bills is to reduce the amount of energy that people need.
Better insulated homes will need less gas, and people can also do things like turn down their boilers’ flow temperature to reduce their gas use, without making their homes colder.
Mike Thornton, chief executive at Energy Saving Trust, said: ‘Energy prices are still high and we may see increases again this winter, so the message for government hasn’t changed.
‘Addressing the root causes – not least our over-reliance on gas – to permanently lower energy prices is more important than ever.’
He added: ‘As we head into winter, the cost of heating our homes comes back into focus but investing in insulation and other forms of energy efficiency remains out of reach for many.
‘A wrap-around national retrofit programme for households, underpinned by financial incentives and personalised advice, would reduce our demand for gas and bring bills down in both the short and long term.’
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