UK homes expected to save £251 with new energy price cap

Recent gas price surge may raise energy cap to £1,979 for early 2024, according to a new report

UK households are preparing for a minor decrease in their energy bills, but energy costs are projected to remain significantly higher than pre-crisis levels.

Consultancy Cornwall Insight forecasts the fourth quarter price cap for a typical dual-fuel household to be £1,823 using the new lower Typical Domestic Consumption Values (TDCVs), representing a quarter-on-quarter reduction of 7%.

Starting with the October cap, the UK’s energy regulator, Ofgem, is set to revise the TDCVs for an average household’s gas and electricity usage.

The adjustments are anticipated to amount to approximately 7% per year for electricity and 4% per year for gas.

On 1st July, the energy price cap was set at £2,074 annually for a standard household that receives both gas and electricity from a single supplier.

The official announcement of the cap by Ofgem is scheduled for next Friday 25th August.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight said: “While a small decrease in October’s bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills.

“As many, including energy regulator Ofgem have acknowledged, it is essential that the government explore alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.”

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