However, people on pre-payment meters will see bills fall by slightly less “to reflect the higher cost of providing energy to these customers”. Ofgem said the price cap for pre-payment meter customers will also fall – by £25 to £1,217 a year from October 1. As a result, energy bills will fall this winter for around 15 million households who are protected by the price caps.
Ofgem said the price reductions were in response to a significant fall in wholesale energy prices between February and June 2019.
Prices have been pushed down by a combination of low demand during the winter, strong gas supply and relatively healthy storage levels, meaning both caps could be reduced.
The wholesale energy cost element of the default tariff cap fell by £75 to £446 while other costs, such as VAT and supplier profits, also fell slightly.
The reductions offset cost increases totalling £7 in terms of other elements including operating costs, network charges and environmental schemes, resulting in the overall £75 reduction.
Last month, the Competition and Markets Authority decided to bring the methodology for calculating the pre-payment cap in line with the default cap.
Therefore the level of the pre-payment meter cap is higher than the default tariff cap.
Ofgem said the pre-payment meter cap now “fully reflects the higher cost of providing energy to these customers (incurred by operating pre-pay keys and cards used to top up pre-payment meters)”.
Dermot Nolan, chief executive of Ofgem, said: “The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.
“This means the energy bills of around 15 million customers on default deals or pre-payment meters will fall this winter to reflect the reduction in cost of the wholesale energy.
“These customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it.
“Households can cut their bills further in time for winter, and we would encourage all customers to shop around to get themselves the best deal possible for their energy.”
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