Household energy bills are poised to decrease by £150 annually, reaching a new average of £1,923, as the energy price cap experiences its lowest point since early 2022. However, for seven million individuals, costs may rise compared to the previous year due to the conclusion of support payments. Ofgem has implemented a reduction in the energy price cap from an average of £2,074 per year to £1,923, attributing this change to lowered wholesale expenses. Notably, gas rates will decline from 6.9p per kWh to 6.89p, while electricity charges will decrease from 30.1p/kWh to 27.35p.
While this decrease in the price cap is perceived as positive, concerns persist regarding the affordability of energy bills. Charities and activists are advocating for an urgent overhaul of the energy market, highlighting that despite the reduction, bills remain prohibitively high for many. Ofgem’s adjustments are based on a per-unit charge, with larger consumption resulting in higher expenses. The average household bill is projected to amount to approximately £1,923 per annum, whereas prepayment meter users will encounter an average of £1,949.
Despite these changes, the reduction is tempered by an increase in standing charges and the discontinuation of government support payments. This context leads to projections that more than seven million households could face elevated winter bills compared to the previous year. The Resolution Foundation emphasizes that even though the cost per energy unit is decreasing, this benefit could be offset by other factors.
Campaigners and experts continue to advocate for further reforms, including the implementation of social tariffs to assist vulnerable households. Ofgem’s Chief Executive, Jonathan Brearley, acknowledges the ongoing challenges related to living costs and energy bills. He notes that while prices are becoming more manageable, there remains uncertainty about the winter ahead and the struggles some customers might face.
Overall, while the decrease in the energy price cap is welcome, it underscores the need for comprehensive measures to address the long-standing issue of energy affordability and ensure that households are adequately supported during the winter months.
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