Neil Shaw reports that the predicted decline still leaves expenditures “above pre-crisis levels.”

Households in the UK could see a £150 reduction in their energy bills beginning in October, but experts have cautioned individuals to exercise caution as the figure has misled many. 

According to Cornwall Insight, Ofgem’s price limit will fall to approximately £1,925; the news will be released on Friday.

It is the lowest the limit has been since March 2022, a 7% decrease, but residents have been reminded that the figure does not represent the total amount they would pay, as it caps the amount paid per kilowatt-hour or unit of gas and electricity. 

The amount is based on what Ofgem believes a typical household will consume; if you consume more, you will pay more, and vice versa.

Now that Ofgem has reduced the amount it assumes each household consumes, the cap will be approximately £1,823, with each unit of electricity costing 26.96p and each unit of gas costing 6.96p. The forecast predicted that household bills would increase once more in the future, as early as the first three months of 2024, with electricity prices increasing to 29.48p and gas prices increasing to 7.72p, adding £150 to the average bill.

Dr Craig Lowrey, the principal consultant at Cornwall Insight, stated, “While a small decrease in October’s bills is to be applauded, we once again see energy price forecasts well above pre-crisis levels, highlighting the limitations of the price cap as a tool to assist households with energy bills.”

The consultant stated that the government must investigate “alternative solutions,” such as social tariffs, to provide “stability and affordability.” The company acknowledged that events on the ‘other side of the globe’ have affected petrol prices and its price cap forecasts.

Dr Lowrey stated, “Similar to how wholesale market volatility affected our cap forecasts last year, similar developments have the potential to cause significant changes in 2024 household bills.” 

The UK is extremely susceptible to global wholesale energy market fluctuations due to its structural reliance on gas imports.

The consultant stated that the situation demonstrates the need for an energy policy to ‘accommodate the practicalities’ of a global energy market – with support for domestically sourced, sustainable supplies that offer stable energy prices.