UK energy markets regulator Ofgem has lowered the country’s energy price cap for the fourth quarter of 2023, which means that millions of households will see their energy bills fall at the start of the upcoming heating season.
The UK has a so-called Energy Price Cap in place, which protects households from high bills by capping the price that providers can pass on to them.
The cap was raised a few times last year after wholesale energy prices, especially the price of natural gas, surged in the spring and summer of 2022 following the Russian invasion of Ukraine and the energy crisis in Europe that followed. The high energy prices plunged millions of households into energy poverty last year.
This year, the cap has been lowered already once for the current quarter.
Now Ofgem announces a further reduction in the energy price cap for the period October to December 2023.
Between October 1 and December 31, 2023, the cap will be set at $2,426 (£1,923) a year for a typical household who use gas and electricity and pay by Direct Debit.
The change will bring the average dual-fuel energy bill below $2,523 (£2,000) a year for the first time since April 2022, saving households an average of $190 (£151) compared to the third quarter.
The drop brings the energy price cap to its lowest level since October 2021 and reflects further falls in wholesale energy prices, as the market stabilizes and suppliers return to a healthier financial position after years of losses, Ofgem said.
The UK’s energy supply sector is set to return to profits after five years of losses and two years of bankruptcies and hardship in the energy crisis, Ofgem said last month, but warned companies against splashing profits on dividends.
The UK’s energy providers were decimated by the surge in wholesale natural gas prices at the end of 2021 and in 2022 when around 30 suppliers went bankrupt and exited the energy market.
The Energy Price Cap protects households from high bills by capping the price that providers can pass on to them, but additionally burdens energy providers.
Source: Oilprice.com