Ofgem, the government's regulator for electricity and gas, has issued a warning to anybody with an electric meter. It comes as the price cap is reduced today, seeing a significant fall in energy costs.
Now people across Great Britain have been urged to take meter readings today (July 1) as the new energy prices come into force that are likely to save households hundreds of pounds a year. The average price for each unit of electricity that someone uses has been slashed to 30p per unit, while gas prices will drop to 8p per unit.
It will save the average household around £426 a year on their energy bills, according to regulator Ofgem – which sets the levels and calculated average usage. It means that the new average price that Ofgem says a household can be charged will fall from £3,280 to £2,074.
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After Government support, households were paying an average of £2,500 – meaning they will save a little over £400. It is the first time in more than three years, since February 2020, that energy bills for people on their supplier’s standard tariff have fallen, says PA.
But those bills are still unusually high by historic standards. Less than two years ago, typical household bills were just £1,271 a year.
On Friday, Ofgem said: “This remains one of the most difficult and volatile periods in history for energy consumers. As energy regulator, we have taken a range of steps to stabilise the market and protect vulnerable consumers.
“We will also continue to support energy customers by passing savings from drops in wholesale prices onto customers more quickly through the quarterly price cap. Anyone struggling to pay their bills should reach out to their supplier as soon as possible.”
The headline price cap figure is an average across households rather than an absolute cap on bills, so those that use more will pay more.
Saturday also brings a little extra good news for customers who pay for their energy in advance. Households with a pre-payment meter have in the past been charged a little more because it costs more for their supplier to serve them.
But critics have said that this penalises some of the least well off, who are more likely to have such a meter. From Saturday that charge has been removed, which the Government said will save around three million households around £21 each.
The Government will initially cover these extra charges before they can be phased out by April 2024. No-one should be charged more for having a prepayment meter – today, we’re putting an end to this historic injustice,” said energy consumer and affordability minister Amanda Solloway.
"With households on prepayment meters typically on some of the lowest incomes, this is a vital change.” Yesterday (June 30) Adam Scorer, chief executive of the charity National Energy Action, said: “Despite falls in retail prices from July, many of the people we help are still struggling.
"As of tomorrow, two thirds of households across the UK will no longer benefit from any assistance to offset the impacts of the energy crisis and Ofgem’s price cap will offer limited protection to these households.”
Which? Energy editor Emily Seymour said: “Fixed deals are starting to return to the market for existing customers of some suppliers. We wouldn’t recommend fixing anything higher than the unit rates in your current deal or for longer than a year.
“If you are offered a deal, then it’s really important to check the tariff’s exit fees in case you want to leave that deal early if the price cap comes down. A spokeswoman for Energy UK, which represents suppliers, said: "If – as the current projections indicate – annual bills of £2,000 plus become the new normal, it underlines the importance and urgency of the energy industry, Ofgem, Government and consumer groups working together to put in place targeted support for those most in need next winter.”
Households should submit meter readings as soon as they can, preferable having done so before midnight on Friday, however the earlier the better this weekend. Accurate readings will stop the household’s supplier from estimating usage and potentially applying the old higher prices to energy that is used after June 30.
Those who, for whatever reason, cannot submit readings ahead of June 30 should do so as close to the date as possible, keeping a date-stamped photo as proof. Household energy bills are expected to fall again, to below £2,000 a year from October, according to latest forecasts.
Energy industry consultancy Cornwall Insight said it thinks the price cap on energy bills will fall to £1,978.33 from October from July’s £2,074, but rise again from January to £2,004.40, based on Ofgem’s current measures. However, the regulator is adjusting its definition of the average household’s consumption from October, down from the current 2,900 kWh a year for electricity to 2,700 kWh, and from 12,000 kWh for gas to 11,500 kWh, to reflect consumers using less energy to cut costs in the face of high prices.
Based on Ofgem’s adjusted definitions of average usage, Cornwall Insight has forecast that the regulator will announce price caps of £1,871 a year from October and £1,900 from January.
