Winter energy bills tick lower but will remain high – BBC News

An annual energy bill for a typical household will fall to £1,923 in October under regulator Ofgem’s new price cap.

The maximum price of each unit of gas and electricity for 29 million households in England, Wales and Scotland is governed by the decision.

A typical bill will be £151 lower than currently and £577 down on last winter.

But reduced government support and higher fixed costs mean many will see little difference in what they pay.

Ofgem chief executive Jonathan Brearley told the BBC’s Today programme: “We know people are struggling with the wider cost of living challenges and I can’t offer any certainty that things will ease this winter.”

He also said that prices paid by suppliers would be “volatile for some time to come”, offering little long-term certainty to customers.

Ofgem’s price cap is now set every three months, partially to reflect changes in wholesale prices which are paid by energy suppliers.

It sets the maximum amount that suppliers can charge for each unit of energy but not the total bill. If you use more, you will pay more.

For a home using a typical amount of gas and electricity and paying by direct debit, the current annual bill is £2,074.

This will fall to £1,923 for the final three months of this year.

Specifically, the price of gas will fall from 7.5p per kilowatt hour (kWh) now to 6.89p from October. The price of electricity will fall from 30.1p per kWh to 27.35p.

The typical bill is calculated on an estimate that the average household uses 2,900 kWh of electricity and 12,000 kWh of gas.

Those who pay via prepayment meters will see their typical bill fall to £1,949, from £2,077.

Those who pay bills every three months, often by cheque – known as standard credit – will pay £129 more a year than those using direct debit.

Domestic energy bills will be lower than the £2,500 a year paid last winter and spring, when the government stepped in after costs rocketed following Russia’s invasion of Ukraine last year.

However, a cap set by the government is no longer needed and last winter’s £400 discount to every household, which was paid in six instalments between October and March, has finished. And there appear to be no plans to repeat the discount.

Bills will still be considerably higher than the typical level of £1,277 a year which was paid in the winter of 2021.

Standing charges, a fixed daily payment covering the costs of supply and other levies, have been rising and are expected to continue to go up. Mr Brearley said that it was difficult to shift some of these costs onto usage prices.

The average standing charge for electricity will be 53.37p per day from October. For gas customers, the standing charge will be 29.62p per day.

They, like the overall cap, vary by region, with some areas such as North Wales and Merseyside paying more. This tends to be for historical reasons in terms of getting energy to these areas. That will have more of an effect on those with relatively low energy use, who cannot cut back any further to reduce their bill.

“Typical households are still facing sky-high energy costs, now that support schemes have come to an end,” said Gillian Cooper, from Citizens Advice.

“Government must step in quickly with more targeted support for the households who need it most.”

Mr Brearley said that social tariffs, for lower-income households, should be considered as an option.

Jay Cross, who runs a barbers shop, said he and his wife Andrea found their direct debits were failing to cover their bills last year.

“We ran over on the bills and then made payment plans to catch up with it,” he said.

“We’ve got no choice, we’ve got to have the heating on – especially with the baby. We’re still in arrears but we are going to get back on top of it ready for this winter.”

Analysts suggest bills are unlikely to fall significantly for the next decade.

The government said it had spent nearly £40bn putting a limit on bills throughout last winter, since when wholesale energy prices – as well as the costs for consumers – had dropped. Additional help was being offered through schemes like the Warm Home Discount.

Speaking on the BBC energy minister Andrew Bowie, said: “I think people will welcome the fact that average energy bills will now be lower than at any point since early 2022.

“So this is a positive day, we’re moving in the right direction and I think that we should welcome it.”

But shadow climate change secretary Ed Miliband, said: “Higher energy bills are unfortunately here to stay under the Conservatives, even with this fall, bills are significantly higher than they were only three years ago.”

He said Labour would bring in a “proper windfall tax”.

Cost-of-living payments will continue to be made to people on lower incomes and those receiving certain benefits to help with high bills.

Here are some energy saving ideas from environmental scientist Angela Terry, who set up One Home, a social enterprise that shares green, money-saving tips:

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