The default price cap will reduce from £1,254 to £1,179 from 1st October for this winter period until March and the prepayment meter cap will also reduce from £1,242 to £1,217 per year for the same six-month period.
Around 11 million households on the default or standard variable tariffs and an additional four million customers on prepayment meters will be affected.
The news follows the competition watchdog’s recommendation to extend the price cap for prepayment meter customers beyond 2020.
However, energy bills will still be higher for consumers than they were in January when the first default price cap – which stood at £1,137 a year on average – came into effect.
Ofgem says the latest price reductions come as wholesale energy prices have significantly fallen between February and June 2019, driven by a combination of low demand during the winter, strong gas supply and relatively healthy storage levels.
Chief Executive Dermot Nolan adds: “The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls. This means the energy bills of around 15 million customers on default deals or prepayment meters will fall this winter to reflect the reduction in cost of the wholesale energy. These customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it.
“Households can cut their bills further in time for winter and we would encourage all customers to shop around to get themselves the best deal possible for their energy.”
Newly appointed Energy and Clean Growth Minister Kwasi Kwarteng said: “Our action to ensure all consumers pay a fair price for their energy is putting money back in the pockets of up to 11 million households. The increased competition in the UK energy market facilitated by the energy price cap has enabled more suppliers than ever before to enter the market, driving the innovation and value that we all want to see.”