The new energy price cap set by Ofgem, the British energy regulator, is below £2,000 for the first time in 18 months, but it remains significantly higher than during 2020 and 2021 before the Russian invasion of Ukraine pushed up energy prices.
The cap does not set the maximum a household will pay for their energy but establishes a maximum amount providers can charge per unit of gas or electricity. At its peak, the price cap reached £4,279.
In the period between July and October 2023 the price cap was set at £2,074.
The new cap has reached the lowest level since October 2021. According to the regulator, this reflects further falls in wholesale energy prices as the market stabilises and suppliers return to a healthier financial position.
However, Ofgem has warned that, over the last year, consumers have been shielded from the dramatic rise in energy bills by initiatives such as the £400 Energy Bill Support Scheme, which came to an end in July.
Moreover, standing charges have risen from an average of £186 a year in October 2021 to just over £300.
"I'm afraid prices are going to be volatile for some time to come," said Jonathan Brearley, chief executive of Ofgem, in a BBC Radio 4 interview. "The price today is way higher than before the crisis. So many families are going to struggle."
Citizens Advice has also expressed its concerns regarding the end of government support for energy bills.
"The next few months will push households like these over the edge," said Gillian Cooper, the head of energy policy at Citizens Advice. "Our data suggests it will be as bad, if not worse, than last winter. The government must step in quickly with more targeted support for households that need it most."
Simon Francis, the coordinator of the End Fuel Poverty Coalition, said: "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."
The price cap will be reviewed once again before the end of the year and could rise again from January 2024, with consultancies like Cornwall Insight forecasting it could surpass £2,000 because of the volatile energy prices.
"While a small decrease in October's bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills," said Craig Lowrey, consultant at Cornwall Insight.
Speaking to reporters in Yorkshire, Prime Minister Rishi Sunak said: "I know things are still tough, and that's why we are working night and day to bring down inflation so that the money in people's pockets can go further."
