Today’s announcement from the energy regulator means the average household’s energy bills will dip below £2,000 a year for the first time since April 2022.

The current cap of £2,074 a year will drop to £1,923 for the average household in England, Wales and Scotland from 1 October.

But it’s important to remember the cap applies to the unit price of energy, not the total bill, so if you use more, you’ll pay more.

The reduction is largely explained by weaker wholesale prices, according to Sky News.

The price cap would have been lower still, by a further £100, if it had reflected a looming Ofgem calculation that gives a nod to reduced energy use.

Household consumption has fallen sharply following the bill shocks of the past 18 months.

However, there are warnings from industry forecasts that peak winter will likely see bills rise back above the £2,000 mark.

Even at the reduced cap mark, it remains about £800 above 2019 levels at a time when families are dealing with high inflation and higher housing costs – mostly as a consequence of interest rate rises by the Bank of England intended to dull the pace of price rises in the economy.

The Resolution Foundation blamed the withdrawal of energy support schemes and a rise in charges added to bills.

Prices rose sharply when demand for gas increased when lockdown restrictions were lifted.

Then Russia invaded Ukraine which disrupted supply and pushed up demand, and therefore the price of gas from other countries.

Reaction to the announcement:

Senior consultant Kate Mulvany told BBC Radio 4’s Today programme that while wholesale energy prices had been falling, the drop in bills from October will probably be a little less than consumers were hoping for.

“Unfortunately… our forecasting to the end of this decade is that prices are going to stay higher than people were used to before the energy price crisis,” she said.

The price cap sets a limit on the amount suppliers can charge for each unit of gas and electricity used and for the privilege of being connected to the energy network.

The more you use, the more you pay


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