Households will see their gas and electricity bills change on Saturday when Ofgem’s latest energy price cap comes into force.
The Industry regulator made the announcement in May, and a recent forecast from Cornwall Insight said energy bills will rise again under the January 2024 price cap.
The research firm said it saw the cap for a typical household at the equivalent of £1,871 per year from October to the end of December.
Here’s everything you need to know
Released quarterly, the cap limits what utility companies can charge customers for each unit of gas and electricity they use.
It sets these two things:
• The maximum amount energy firms can charge for each unit (measured in kilowatt-hours) of gas and electricity
• The maximum daily standing charge – which is part of your bill that pays to be connected to the grid
This still means the more energy you use, the more you pay.
Currently, this is most households – whether you pay by direct debit or a prepayment meter.
It doesn’t apply to the small numbers of people on fixed rate tariffs – set by the energy companies, not the regulator – and people who use oil to heat their homes.
Ofgem announced it was cutting its price cap from £3,280 to £2,074 in May – but Saturday is when it comes into force.
It means the average household energy bill will fall by £426 a year.
Please use Chrome browser for a more accessible video player
The £2,074 figure is how much the average household would typically use over a period of a year based on the updated unit price.
But the total annual cost per customer will be different depending on how many people you live with, the size of your home and how much energy you use.
Unit prices for gas and electricity are going down by around 3p.
According to money-saving campaigner Martin Lewis, this means bills will decrease by roughly 17%.
So for every £100 you were paying for energy, you will now only pay £83, he said.
What about the government help scheme?
Households have been partly shielded from the most recent rise in prices by the government’s energy price guarantee (EPG), which limited annual energy costs to £2,500 for the average household – subsidising Ofgem’s price cap.
It meant the current price cap of £3,280 for March to June was redundant because the government’s EPG was lower.
That support – of £400 over six monthly instalments – comes to an end tomorrow, which allows the price cap to come back into play.
People have been urged to submit meter readings before midnight on Friday to ensure they are paying the lower prices as soon as they come into effect.
Read more from Sky News:
Average energy use means lower bills forecast but still higher than historical levels
Energy price cap falls significantly as Ofgem reveals new level for average bills
Five things you should do to make sure you’re saving money when price cap changes
Ahead of the energy price cap changing tomorrow, Uswitch has revealed a handy checklist for customers to tick off beforehand.
Energy expert at the company Ben Gallizzi said: “Taking regular meter readings and checking the level of your direct debit are as important as ever, and it is also worth keeping a close eye on the energy market as fixed deals return.
“The energy market remains volatile, so deals are mostly being offered only for short periods and to limited numbers of customers.
“Consumers need to be proactive and prepared to move quickly if they want to lock in certainty over their energy bills with a fixed deal.”
Be the first to get Breaking News
Install the Sky News app for free
Here is a checklist for households preparing for the price cap, courtesy of Uswitch:
• Keep your meter readings up to date and if you do not have a smart meter, regularly take meter readings and submit them to your supplier. This makes sure your bill is accurate.
• Check your monthly direct debit payments reflect your actual use and inform your provider if not.
• Monitor how much energy you’re using by downloading Utrack, a free mobile app that offers regular insights into your energy spend.
• Sign up for alerts on fixed tariff announcements so you can decide to lock in a deal if one becomes available.
• Check what energy support schemes or grants you, or any vulnerable friends or relatives, may qualify for.
