Millions of households are set to be told a £190 change is coming to their energy bills.
The apparent cut is being driven not by cheaper energy, but by a change in the way regulator Ofgem calculates the “typical” household bill. Under the current system, the average annual dual-fuel bill would be expected to rise to about £1,899 in October – around £140 higher than a year earlier – according to forecasts from consultancy Cornwall Insight. But Ofgem has sharply reduced its assumptions about how much gas and electricity a typical household uses.
As a result, the official “typical” annual bill figure for October will instead be quoted at about £1,709 – some £190 lower than it would previously have been.
The move comes as households continue cutting back on heating and power use following the energy crisis and years of soaring bills.
Ofgem said household energy consumption had “changed materially in recent years”, blaming a mix of improved energy efficiency, “climatic changes” and “behavioural responses to affordability pressures”.
The regulator said the new figures would “better reflect the most up-to-date domestic consumption behaviour”.
Under the changes, Ofgem’s benchmark for a medium-use gas customer will fall from 11,500kWh a year to 9,500kWh, while electricity use assumptions will fall from 2,700kWh to 2,500kWh.
Critics are likely to argue that the changes risk confusing consumers because headline annual bill figures will appear lower even while unit prices continue rising.
Ofgem itself acknowledged the danger that customers could wrongly believe energy prices are falling.
In its decision document, the regulator admitted there was “a risk that headline bill figures could be misinterpreted as indicating falling prices, when in reality they reflect less consumption”.
The watchdog insisted the move was a “technical change” designed to improve communications.
It said: “We consider this is a technical change which supports clearer, more consistent communication of prices which better reflect the most up-to-date domestic consumption behaviour.”
Ofgem also said the updated figures were needed because existing assumptions “no longer provided the most representative view of typical household usage”.
The regulator said there had been “broad support” from suppliers and industry groups for updating the calculations.
Forecasts from Cornwall Insight show that using the old assumptions, the October price cap would have been £1,899.44. Under the new lower consumption assumptions, the equivalent figure drops to £1,709.20.
However, the actual unit rates households pay are still expected to rise. Ofgem’s own analysis shows the methodology changes will add around 0.19p per kWh to electricity rates and 0.07p per kWh to gas rates for typical direct debit customers.
Ofgem has ruled that all future price cap announcements will use the new revised calculations for energy use.
