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New energy price cap comes into effect

Posted 22/09/2023 by Alex Moore
Hot drink with candles and book

Ofgem (the Office of Gas and Electricity Markets) have revealed that the UK energy price cap (default tariff) will be lower for the October through December 2023 period than it was in the previous period July through September period. The reduced UK energy price cap came into effect on the 1st of October.

The CEO of Ofgem Jonathan Brearley said that

“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.”

Jonathan suggests cautious optimism heading into the winter period which is a realistic approach. The Ofgem energy price cap reducing for winter will help, but you should still be savvy with how you use energy and how you can protect your property this winter.

What is the Ofgem energy price cap for 2023?

The new energy price cap is set to reduce to £1,923, a decrease of 7% from the July to September 2023 energy price cap.

Of the various factors impacting the UK energy price cap, the leading factor is likely the gradual decline in wholesale gas and electricity prices.

The reduction in Russian gas supplied to Europe had led to high prices in 2022. Steady liquified natural gas (LNG) imports throughout 2023, most of which have been imported from the US, have helped curb the impact.

Consumer rights expert and founder of Martin Lewis explained:

“With monthly direct debit, firms estimate your usage, and assign it to a certain period, so submitting a reading within a few days of the change (many let you backdate a few days too) reduces the risk of their 'estimating' going against you (though there's always a chance a discrepancy could end up in your favour).”

How much will energy cost per kWh?

The daily standing charge for electricity is set to remain the same for customers on a standard variable tariff (default tariff) at 53p per day. Where you will be saving money however is how much you pay per kWh. Decreasing by 10% from the previous period, the cost of electricity per kWh will be 27p.

Although not reducing as much, the cost of gas per kWh is decreasing from 8p down to 7p. However, the daily standing charge is increasing from 29p to 30p.

What is the Ofgem energy price cap for prepayment meters (PPM)?

On the topic of prepayment meters, Ofgem CEO Jonathan Brearley had the following to say.

“…we’ve introduced new measures to support consumers including reducing costs for those on pre-payment meters, and introducing a PPM code of conduct that all suppliers need to meet before they restart installation of any mandatory PPMs.”

From October 1st through to the 31st of December, the PPM energy price cap is set to decrease to £1,949, which is a 6% decrease from the previous level. The government has aimed to bring PPM energy costs down to be more comparable to direct debit energy costs, and so while the PPM energy price cap is still £26 higher the gap is reducing over time.

Heading into winter it’s good to consider your options. Whether you’re ready for your next move, considering downsizing, or just curious how much your property is worth in the current market, our local experts are here to help.

Book your FREE property valuation today

Alex Moore

Reeds Rains E-marketing Executive

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