Millions of British households are set for welcome relief as major energy suppliers announce significant price reductions starting this week. The change comes as the new energy price cap takes effect, forcing suppliers to adjust their standard variable tariffs.
What's Changing for Energy Customers?
From October 1st, the average household's energy bill will drop by approximately 7%, representing around £151 in annual savings for typical dual-fuel customers. This marks the first time energy prices have fallen below £2,000 since the height of the cost of living crisis.
Supplier-Specific Reductions
British Gas has confirmed it will reduce its standard variable tariff in line with the new price cap, affecting millions of customers across the UK. The supplier, which serves approximately one in six British households, has been contacting customers about the upcoming changes.
OVO Energy, the UK's third-largest energy provider, is implementing similar reductions. The company has emphasised that these changes will apply automatically to customers on standard variable tariffs.
Octopus Energy and E.On Next have also announced they will pass on the full reduction to their customers, with Octopus noting that some customers might see even bigger savings depending on their tariff and usage patterns.
Understanding the Price Cap Mechanism
The energy price cap, set by regulator Ofgem, limits the amount suppliers can charge per unit of energy. The latest reduction reflects falling wholesale gas and electricity prices over recent months.
However, experts caution that while the reduction is welcome news, bills remain significantly higher than pre-crisis levels. The average household will still pay roughly 60% more for energy compared to winter 2021.
What This Means for Your Budget
- Average annual bill drops from £2,074 to £1,923
- Savings of approximately £12.50 per month for typical households
- Direct debit customers should see automatic adjustments
- Prepayment meter customers will benefit from equivalent reductions
Looking Ahead to Winter
While the price reduction provides some breathing room, energy analysts warn that prices could rise again in January when the next price cap adjustment occurs. The volatile international energy market continues to pose challenges for long-term price stability.
Consumer groups are urging households to continue implementing energy-saving measures and to consider whether fixed-rate deals might offer better value as they become available in the coming months.
For now, the autumn price reduction offers much-needed financial relief to families grappling with the ongoing cost of living pressures across the United Kingdom.
