Ofgem announces further reduction in energy price cap, providing relief to UK households

The energy price cap sets the maximum amount that energy suppliers can charge per unit of energy consumed. At the beginning of the year, the price cap was at £4,279 per household, which then decreased to £3,280 in the second quarter.

During both quarters, the government’s Energy Price Guarantee was set at £2,500 to safeguard struggling households from exorbitant energy bills. Consequently, the total energy bill paid by the UK’s 27.5 million households amounted to an estimated £68.7 billion in both the first and second quarters.

Between July and September, the energy price cap was further reduced to £2,074 per household, while the government’s Energy Price Guarantee increased to £3,000. This resulted in a significant decrease of over £11.7 billion in total expenses for the nation, amounting to £57.0 billion in Q3.

Starting this Sunday, the energy price cap will experience another drop, this time to £1,923, marking a -7.3% decrease compared to the previous quarter and a -55.1% reduction when compared to the first quarter of the year.

As a result, Fair Fix estimates that the total amount paid by households for their energy during the final quarter of 2023 will be approximately £52.8 billion. This represents a substantial reduction of £4.15 billion compared to the previous three months and a remarkable £15.8 billion less compared to the first quarter of the year.

This reduction in the energy price cap comes as a welcome relief for UK households, promising lower energy bills and greater financial stability as the year draws to a close.