ENERGY bills are expected to fall for millions of British households this October after the regulator, Ofgem, lowered price caps.
The move has come amidst growing criticism that the the energy price cap brought in by the regulator was not doing what it was brought in to do - protect 11 million British households from rip-off gas and electricity tariffs.
Ofgem, which sets the maximum prices that can be charged for gas and electricity to those who have not switched suppliers and are on default tariffs have set a new cap that could see households typically pay £75 less a year.
The regulator attributed the fall to lower wholesale energy prices.
Ofgem boss Dermot Nolan said: "The price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.
READ MORE: Video: The £1 billion cost of the great 'price cap' energy bill hike
"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."
The millions on default, or standard variable tariffs would typically now expect to pay £1,179 a year - £75 (six per cent) less than the current cap.
Ofgem said when the cap was brought in in January, to be initially set at £1,137 per year for a typical dual fuel customer paying by direct debit, it said would bring household bills down by around £76 per year on average, saving over £830 million over a year.
But within a month, on February 7, the new cap raised typical UK default and standard variable gas and electricity tariffs by £117 to £1,254 a year from April 1 due to hikes in wholesale energy costs.
Experts had calculated that the energy price cap would then now cost those 11 million households £1.29 billion a year from April.
Perth-based SSE and Glasgow-based Scottish Power and the rest of the "big six" energy companies had raised its standard variable energy tariff to meet the raise in the price cap from April 1 brought in by Ofgem.
Consumer groups are now expecting those companies to reduce prices to users.
READ MORE: Energy price cap branded "con" as Scots energy bills set to rise by up to £184 a year
Natalie Hitchins, Which? head of home products and services, said: “Lowering the price cap will provide some relief to hard-pressed households - but millions of energy customers on default tariffs will still be left paying hundreds of pounds more than they need to each year.
“While the deadline for energy providers to lower their prices is October 1, we would urge companies to pass on these savings as soon as possible.
"However, to benefit from the best deals on the market customers should consider switching providers – you could save over £400 a year, and potentially receive better customer service too.”
The new cap will also help four million people on prepayment meters, with the typical customer paying £1,217 per year, down £25 from the previous cap level.
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