ENERGY bills will fall by around £150 per year for a typical household from the start of October, according to a new forecast.
Ofgem’s next price cap, which will be announced next Friday, will drop to around £1,925, according to Cornwall Insight.
Ofgem will announce the October price cap rates next FridayCredit: Rex
It is a reduction of 7% compared to the July price cap, and the lowest it has been since March 2022.
But experts have urged caution after surveys showed the £1,925 per year figure has misled many people.
This is not a cap on the overall amount people will pay for their energy.
Instead, it caps the amount that they pay per kilowatt hour, or unit, of gas and electricity.
The £1,925 figure is calculated based on what Ofgem thinks an average household will use.
This is calculated assuming that a typical household uses 2,900 kWh of electricity and 12,000 kWh of gas across a 12-month period.
Those who use less will pay less, and those who use more will pay more.
Right now a typical household pays £2,073.98 a year under the July price cap which charges the following rates:
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7.51p per killowatt hour (p/kWh) for gas
30.11p/kWh for electricity
A standing charge of 29.11p per day for gas
A standing charge of 52.97p per day for electricity
But from October 1, Cornwall Insight predicts that average bills for the 29million households on variable tariffs will drop by £150 because the rates will be capped at:
6.93p per killowatt hour (p/kWh) for gas
29.96p/kWh for electricity
A standing charge of 29p per day for gas
A standing charge of 53p per day for electricity
Be aware that the exact unit rates and standing charges that you pay will vary slightly based on your supplier, where you live and how you pay for your gas and electricity costs.
Ofgem will announce next week (August 25) the new price cap on energy bills that will then apply from October.
What will happen to energy bills in the longer term?
Cornwall Insight’s forecast sees bills rising again slightly in the future.
In the first three months of next year analysts think that electricity prices will be 29.48p and gas will be 7.72p, adding around £150 to the average annual bill. …