New predictions for the upcoming October price cap reveal a decline in average price expectations.
Starting from October 2023, the Cornwall Insight forecast stands at £1,871 per annum for a typical consumer, rising to £1,900 per annum from January 2024.
The dip in average price cap predictions can be attributed to Ofgem‘s adjustment of the Typical Domestic Consumption Values (TDCVs) that define the average gas and electricity usage of households.
Following a consultation process, Ofgem has revised the TDCVs, reducing the electricity consumption from 2,900kWh per annum to 2,700kWh and the gas consumption from 12,000kWh per annum to 11,500kWh.
The review of TDCVs is a biennial process undertaken by Ofgem, utilising data from the average household consumption over the preceding two years.
However, due to the impact of the pandemic, this review process was temporarily halted.
The revision of TDCVs will not directly impact households, as unit rates and standing charges remain unaffected.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “The fall in the average price cap predictions reflects Ofgem’s efforts to align with the evolving energy consumption patterns of typical households, as consumers respond to high prices, energy efficiency measures, weather conditions and other influences by reducing their energy usage.
“While typical household predictions may provide some insight for consumers, households are still facing the challenge of bills that are well above historic levels.”
Emily Seymour, Which? Energy Editor, said: “The drop in these latest price cap predictions is largely due to the fact that Ofgem will update its definition of a typical energy user from October – so people won’t see a huge drop in their bills from the July price cap.
“Customers keen to see how the new predictions will affect their bills should look at the forecasted unit rates, which remain comparable to today’s prices. Average prices per unit will be 30p per kWh of electricity and 7.5p per kWh of gas from 1st July. From October, these average rates are predicted to drop slightly to 27.5p and 6.5p respectively.
“Even with this drop in prices, energy bills are significantly higher than they were before the energy crisis began – meaning some households will still struggle to afford their bill.”
