Ofgem lowers energy costs to lowest in recent years

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【Summary】Ofgem, the British energy regulator, has lowered the price cap for household energy bills by nearly 7%, bringing it to its lowest level since late 2021. The decrease is due to lower wholesale energy prices and the improved financial position of energy suppliers. Ofgem estimates that households will save an average of $190 compared to the previous billing cycle. The regulator expects suppliers to pass on these savings to consumers.

FutureCar Staff Aug 25, 2023 10:20 AM PT

Ofgem lowers energy costs to lowest in recent years

The British energy regulator, Ofgem, announced on Friday that it has lowered the price cap for household bills by nearly 7%. This decision comes as markets adjust to the loss of Russian energy supplies. The new cap, which will be in effect from October 1 to December 31, will be set at $2,434, down from the previous cap of $2,626 for the July-September billing period. Ofgem estimates that households will save an average of $190 compared to the previous cycle.

This decrease brings the price cap to its lowest level since October 2021. It is a result of lower wholesale energy prices compared to the previous year. Ofgem CEO Jonathan Brearley stated that there are signs of stabilization in the financial outlook for energy suppliers, with reasonable profits returning. He emphasized that there is no excuse for suppliers to not pass down these savings to consumers, especially considering the essential nature of the sector and its impact on people's lives.

Last year, energy bills were elevated due to the premium on commodities caused by the Russian invasion of Ukraine. As Europe and Britain sought to reduce their reliance on Russian supplies, wholesale prices soared. The National Grid, responsible for keeping power supplied to Britain, warned that if the Kremlin tightened supplies, it could lead to short-term power disruptions during the winter heating season. While regional supplies are currently secure, Ofgem cautions that there are no guarantees about the future. Despite the positive news of the falling price cap, Ofgem acknowledges that people are still facing challenges with the overall cost of living and cannot provide certainty that things will ease this winter.