The energy cap which sets a maximum price that suppliers can charge per unit is dropping.
Energy regulator Ofgem said the new cap on a unit of gas and electricity would reduce the average bill to £1,923 from October 1, from £2,074 per year.
But it has been warned that millions of households will still struggle to pay bills this winter, with other factors leading to greater costs.
The standing charge on energy bills has risen from 82p to 83p per day for gas and electricity. Households pay this amount – around £303 per year – no matter how much gas or electricity they use.
On top of that, each household’s bill was reduced by between £66 and £67 per month between October and March due to a separate grant, which has now ended.
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While households are unlikely to feel much difference this winter when comparing it to last, it will mean a much smaller bill for the taxpayer, which was paying out billions to subsidise bills last year.
Even Ofgem itself questioned the policy of lowing the cap’s effectiveness, saying: “While the price cap has protected households from the full extent of volatility and surges in wholesale prices over the last two years, it was originally introduced by the Government to protect the minority of consumers who did not switch rather than to cover the vast majority of consumers, as it does now.
“It is a blunt tool and in the current market it has costs as well as benefits. It’s important to look at alternative models to examine whether they could work better with the current volatile market and the move to net zero.”
Labour’s shadow energy and net zero secretary Ed Miliband said: “Higher energy bills are unfortunately here to stay under the Conservatives – even with this fall, bills are significantly higher than they were only three years ago.”
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