Just a week after British Gas announced a price hike for customers on its standard variable tariff, Ofgem has announced that the price cap for three million households on prepayment meters will be reduced from 1 October.
The regulator said average wholesale electricity prices for delivery this winter and the following summer have fallen, while the costs to consumers of the Government’s Capacity Market auction for the coming winter will be lower than expected.
The level will be reduced from about £1,067 to £1,048 for a dual fuel prepayment customer who uses a typical amount of energy.
Ofgem introduced the temporary safeguard tariff in April this year and updates it every six months. It is one of the Competition and Market Authority’s (CMA) remedies resulting from its two year investigation of the energy market. The level of the cap for gas customers has remained broadly unchanged.
The impact an electricity customer sees will depend on what tariff they are on, and whether they are currently paying less than the cap.