The average household energy bill will fall after wholesale prices dropped slightly.
Energy regulator Ofgem said the new cap on a unit of gas and electricity would reduce the average bill to £1,923 from October 1, from £2,074 per year.
The average customer with a prepayment meter will see their bills fall to £1,949 per year.
This average is based on an estimate that the typical household uses 2,900 units of electricity and 12,000 units of gas.
The energy regulator said it was cutting the price of gas from 6.9p per kilowatt hour (kWh) today to 6.89p from October 1. The price of electricity will fall from 30.1p per kWh to 27.35p.
The price cap applies to England, Wales and Scotland.
Ofgem chief executive Jonathan Brearley said: “It is welcome news that the price cap continues to fall, however 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.”
But despite the fall in the cap consumers still face the prospect of paying for more this winter because Government support which was in place last year has gone.
Then, the cap was effectively superseded by the Government’s Energy Price Guarantee which kept the average household’s bill at £2,500.
The energy #PriceCap will change on 1 Oct 2023
If you pay by direct debit it's £1,923 – pre-pay is £1,949
It's based on typical use of an average home on a supplier’s standard default tariff
— Ofgem (@ofgem) August 25, 2023
In addition, the Government was also paying around £66 per month towards each household’s energy bill.
Mr Brearley said that now that energy prices were easing, Ofgem had allowed suppliers to earn a little more money off their customers.
“This means there should be no excuses for suppliers not to be doing all they can to support their customers this winter, and to reinforce this we’ll be introducing a consumer code of conduct which we will look to have in place by winter,” he said.
Mr Brearley is one of many to question the effectiveness of the price cap and point towards the benefits of a so-called social tariff, which would offer cheaper gas and electricity to those most in need.
Without that, experts expect that average energy bills will remain at around £2,000 for vulnerable households for years to come.
Labour’s shadow energy and net zero 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.
From 1 OCT 2023 Price Cap average direct debit unit rates for energy;
ELECTRICITY Unit rate: 27.35p per kWhStanding charge: 53.37p per day
GAS Unit rate: 7p per kWh Standing charge: 30p per day
These are caps on unit rates (not a cap on total bills) and vary by region
— Ofgem (@ofgem) August 25, 2023
“The problem is the Tories have learnt no lessons from this crisis. They continue to side with the oil and gas companies making record profits over hardworking British families, with their refusal to fix the gaping loopholes in the windfall tax or make the sprint we need for clean power, keeping the onshore wind ban and failing to insulate homes.”
David Cheadle, chief operating officer at the Money Advice Trust, the charity behind National Debtline, said: “This is an extremely worrying time for people who have fallen behind on their energy bills, whilst grappling with high costs across the board.
“Looking ahead to winter, many households will face impossible choices without further support.”
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “Ministers had promised to consult on tariff reform to help the households most in need and who most rely on energy to keep themselves safe.
“Sadly, they have abandoned plans for a social tariff consultation.
“The Government seems to be running out of enthusiasm to help people get through the energy bills crisis, and it is also now running out of time to act to keep people warm this winter.”