The impact on customers
The new level will see the default price cap fall from £1,254 to £1,179 (over a 6% drop). The pre-payment meter cap will fall from £1,242 to £1,217 per year (around a 2% drop).
Ofgem expect energy bills to fall this winter for around 15 million households. Exact savings for each household will depend on; the cost of their current deal, how much energy they use and whether they use both gas and electricity.
The justification for this decrease has come from a significant fall in wholesale prices between February and June 2019. Healthy market fundamentals, record gas storage stocks, and periods of low demand across the last winter all contributed to this.
Households are able to cut their bills further by comparing tariffs to find the cheapest that will suit them.
The price cap moving forwards
Ofgem plans to update the level of the cap in April and October every year in order to account for the latest costs of supplying electricity and gas.
The price cap is a temporary measure, to be in place until 2023 at the latest. This allows Ofgem time to implement further reforms to make the energy market more competitive, enabling it to work more effectively for all consumers.
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