The energy price cap will drop by an average of 7% from Sunday 1 October. What will this mean for your household bills? Find out everything you need to know.
The energy price cap is dropping to £1,923 a year based on a typical household’s use, down from a typical £2,074 a year. This affects all those on standard variable tariffs – which is abut 90% of the country right now – so most will see bills fall from Sunday.
Regulator Ofgem changes the price cap every three months to reflect changes in wholesale gas prices and this 7% fall follows a 17% drop we saw in July. However, most will be paying more than last winter as we are no longer getting the £400 government support for bills we got then.
We explain what this price cap means for you, how much you could save, and should you switch to a fixed energy tariff?
If you’re ready to switch now, see how to do an energy comparison and what you need to know about switching in the current market.
What is the energy price cap from October?
While lower bills will reflect the changes for those who are not on fixed tariffs, your actual bill is determined by how much energy you use as the energy price cap limits the amount a supplier can charge per unit of gas or electricity.
Here are the new unit rates and standing charges that apply from 1 October to the end of December. These are averages as the rates vary per region.
|New Energy Price Cap rates from 1 October to 31 December 2023||Energy Price Cap rates from 1 July to 30 September 2023|
|Gas||Unit rate: 6.89p per kilowatt hour (kWh). Standing charge: 29.62p per day||Unit rate: 7.51p per kilowatt hour (kWh). Standing charge: 29.11p per day|
|Electricity||Unit rate: 27.35p per kWh. Standing charge: 53.37p per day||Unit rate: 30.11p per kWh. Standing charge: 52.97p per day|
This is based on payment by direct debit. For customers who pay each month after receiving a bill, it’s typically 6 to 8% higher.
If you’d rather switch to a fixed energy deal, there are some tariffs that will give you price certainty for the next year. See how to find the best gas and electricity deals for you. Or take a look at the open-market deals over at our sister site, Go.Compare.
Does the energy price cap mean you’ll pay less?
Although the price cap has come down because the wholesale price of energy has fallen, it doesn’t necessarily mean your bills will be cheaper than they were last year.
The government’s Energy Bill Support Scheme, which gave all UK households a £400 discount on their energy bills, ended in March 2023. And as the price cap has only dropped by an average of £151, energy bills could end up costing us more this winter than they did in 2022.
And even though the Price Cap is now at its lowest since March 2022, the new price is still 50% more than it was two years ago. So, while it’s good news that the price cap is coming down, energy bills are still very expensive.
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 prepayment meters, and introducing a PPM code of conduct that all suppliers need to meet before they restart installation of any mandatory PPMs.”
Should you fix your energy?
As energy prices start to fall, some providers have started to bring back cheaper fixed energy deals.
While some may offer savings that work out cheaper than the price cap, it is important to note that we do not know for certain where energy prices will go next year. They could fall further or go up, so fixing is essentially a gamble. See will energy prices go down? for the latest predictions.
Also take a look at our guide that explains the pros and cons of switching to a fixed energy tariff in more detail.
You can also see what deals are available if you are thinking of switching at our sister site, Go.Compare.
Can I get help with energy bills?
There is some help available if you need help with energy bills.
The Warm Home Discount scheme provides a £150 discount to low income households to assist with their winter energy bills.
There are also Cold Weather Payments for those who receive the state pension or other social security benefits and Winter Fuel Payments. This applies to anyone living in an area where the average temperature is recorded as zero degrees celsius or below for seven consecutive days.
Should you give a meter reading before the energy price cap drops?
If you have a gas and/or electricity meter, it’s worth taking a reading by the end of Saturday. This means you’ll know how much energy you’ve used before the price drops, avoiding any potential disputes about usage before and after the price drop.
Some suppliers will also let you send a backdated reading after 1 October. Find out when to submit your energy reading to avoid being overcharged, and see each supplier’s rules about backdated readings.