From Tuesday, energy costs are falling for around 21 million households across England, Scotland, and Wales. The drop comes courtesy of Ofgem’s revised price cap, trimming the average monthly bill by about £11. But as colder months approach, there’s still uncertainty over whether these savings will stick.
The typical household energy bill is now capped at £1,720 per year for those paying by direct debit, marking a 7% decrease. Yet, many are wary. The dip in cost, while welcome, may offer only short-term respite, especially when heating becomes essential during winter.
Regulator Ofgem has encouraged households to explore fixed-rate deals for potentially greater stability, though it noted that fixed prices only affect unit rates—actual bills still hinge on usage.
Predicting future prices remains a challenge. Geopolitical tensions, particularly in the Middle East, continue to influence global energy markets.
Analysts at Cornwall Insight have projected a minor 1% fall in October, potentially lowering the average annual bill to £1,697. However, the consultancy warned of “significant uncertainty.”
“The cap remains hundreds of pounds above pre-pandemic prices,” Cornwall Insight stated, with little indication that costs will ease significantly in the near future.
Ofgem’s chief executive, Jonathan Brearley, told BBC’s Today programme that the UK must “get away from this rollercoaster of international gas prices.”
On Tuesday, Ofgem also announced provisional approval for a £24 billion investment in the UK’s energy infrastructure. According to Brearley, this funding will “build a different energy system that is much more stable.” However, the investment is expected to add an extra £104 to household bills by 2031.
With heating generally off during the summer, families are now focusing on managing kitchen energy use—a growing challenge amid rising food prices.
Nadina Hill, a part-time emergency services worker and mother of two, has been actively budgeting energy and food costs.
“It is a struggle, because the price of everything always goes up,” said the 45-year-old.
Hill and her daughter Gracie, 14, joined an eight-week course on cooking nutritious meals on a tight budget. Run by the Stevenage Football Club Foundation’s Community Kitchen, the programme has supported hundreds of families.
Tips from the Community Kitchen:
- Cook meals like pizza in a pan to avoid using the oven
- Prepare bulk meals that can be frozen
- Plan weekly menus to manage spending
- Use tinned or frozen vegetables to cut costs
Gracie also found a bonus use for kitchen scraps: “Instead of wasting all the peelings and putting them in the bin, we would give those as a treat” to her pet rabbit Clover and guinea pigs Miles and Patch.
How Ofgem’s Price Cap Works
The price cap, updated quarterly, sets the maximum suppliers can charge per energy unit for those on variable tariffs across Great Britain (excluding Northern Ireland).
Latest annual averages:
- Direct debit customers: £1,720
- Prepayment meter users: £1,672
- Cash or cheque payers: £1,855
While prices have dropped slightly, they remain significantly above pre-pandemic levels. Many households have adapted by changing daily routines and budgeting more carefully.
Jenny David from Bridgend said cost-saving strategies are now second nature. “It’s become [our] new norm,” she said. Her family invested in an air fryer and swapped paid gym classes for free outdoor sessions.
New Tariff Breakdown
- Gas: 6.33p/kWh (down from 6.99p)
- Electricity: 25.73p/kWh (down from 27.03p)
- Daily standing charge for electricity: 51.37p (down from 53.8p)
- Daily standing charge for gas: 29.82p (down from 32.67p)
Ofgem is currently reviewing the structure of standing charges, sparking fresh debate on their fairness.
Winter Fuel Payment Reinstated
Following backlash over eligibility cuts, the government reversed its decision on the winter fuel payment. As a result, 75% of pensioners in England and Wales will receive the payment in winter 2025. Similar provisions are expected in Scotland.
From this winter, households earning £35,000 or less will receive £200 or £300, depending on their situation. Additionally, the £150 Warm Home Discount will continue, automatically reducing bills for those on means-tested benefits.
With many still navigating the post-pandemic cost-of-living landscape, the small dip in energy bills is a brief relief, but it may not signal lasting change.
