This morning, the new energy price cap was announced, with energy bills set to fall slightly from October. Here's what you need to know.
Energy regulator Ofgem announced that from 1st October, the energy price cap will be set at an average of £1,923 a year for a typical household paying by direct debit.
Currently, the average energy bill for a typical household is set at £2,074, so the October price cap means an average drop of £151 once autumn comes around.
The energy price cap changes every three months and has been falling due to lower wholesale energy prices in the most recent months. From October, prices are set to fall by 7% on average for energy bills across England, Wales, and Scotland. This is the first time the energy price cap has been below £2,000 since before April 2022.
At the height of the energy crisis, the energy price cap got so high that the government had to introduce the energy price guarantee which capped the average typical household bill at £2,500.
However, when the July price cap fell below the level of the price guarantee, the guarantee was no longer needed.
While the prospect of falling energy bills may come as a relief for many as we pre-empt the necessity to keep our homes warm in winter when the cold weather hits, the average bill will still be higher than it was prior to the energy crisis.
This winter households won't benefit from the £400 energy bill support scheme from the government but for low-income households, there will be an additional cost of living payment at some point in the autumn.
Therefore, while energy bill prices will certainly lower come October, there's a possibility that people will see little difference in what they're paying.
However, as always, it's important to note that the new energy price cap of £1,923 is not the maximum amount that you will pay for your energy bill. While it is expressed as an annual average based on typical use, the cap actually applies to the price you pay per unit of energy. If you use more energy than a typical household, you will likely pay more, while those in flats and energy-efficient homes could pay less.
Therefore, it still pays to take steps to learn how to save energy at home and opt for energy-saving products and swaps where you can to reduce your energy bill.
After all, every little really does help.
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