The power worth cap is to fall by £20 a month, the business regulator has introduced, however households are to face an extra “temporary” cost to assist suppliers help struggling clients with report ranges of debt.
Ofgem confirmed a 12% worth cap discount will take impact from 1 April, taking the annual power invoice for a typical family paying by direct debit for fuel and electrical energy to £1,690.
The present degree, in place from January to March, is £1,928.
The fall displays decrease wholesale costs, with pure fuel prices over the height winter season falling throughout Europe resulting from larger stockpiles.
A gentle winter has been an element within the drop.
Read extra:
Energy worth cap discount – reside response
Why the cap has come down in ‘new regular’
The adjustment by Ofgem, whereas some reduction for family budgets squeezed by the powerful financial system, nonetheless leaves the cap greater than 50% up on pre-crisis ranges.
The regulator confirmed alongside the cap determine that it was taking motion to sort out a report £3.1bn in invoice arrears, although prepayment meter clients wouldn’t be affected.
“To address this challenge in the short-term, Ofgem will allow a temporary additional payment of £28 per year (equivalent to £2.33 per month) to make sure suppliers have sufficient funds to support customers who are struggling”, its assertion stated.
“This will be added to the bills of customers who pay by direct debit or standard credit and is partly offset by the termination of an allowance worth £11 per year that covered debt costs related to the COVID pandemic.”
Ofgem stated its wider motion would come with additional closing the hole between the upper costs that prepayment meter clients pay and what most different households face.
It stated these on prepayment meters would save round £49 per yr whereas direct debit clients would pay £10 per yr extra.
The watchdog stated the brand new figures, taken collectively, meant payments would nonetheless fall to their lowest degree since Russia’s invasion of Ukraine in February 2022.
Russia’s huge fuel provides to the continent have been shut down shortly after its army motion started, forcing a scramble for substitute volumes.
Much of the void has been crammed by extra provides from Norway and heightened shipments of liquefied pure fuel (LNG).
Market consultants have warned {that a} return to pre-crisis power costs is unlikely to happen given the brand new realities over the supply of provide hampered, within the quick time period at the least, by assaults on transport within the Red Sea which have compelled LNG cargos to make longer journeys.
The pattern of upper costs has led to questions over whether or not the worth cap, initially launched to stop rip-off costs, has turn into a barrier to competitors. Ofgem is working with the federal government to deal with the cap’s future.
It is now utilised by the overwhelming majority of houses within the wake of the provider disaster that started in 2021 that noticed dozens of operators collapse, together with Bulb.
Fixed offers have been arduous to come back by ever since however there are some which have undercut the worth cap.
Read extra: What is the worth cap – and the way will it have an effect on my payments?
Research for skilled providers agency KPMG, launched individually on Friday, prompt 48% of households believed the worth cap was a barrier to fixed-term gives by suppliers.
A 3rd of respondents stated they not shopped round due to the cap.
Price comparability web site uSwitch stated Ofgem’s wider motion on parts of the worth cap invoice ought to assist enhance the quantity of gives.
Its director of regulation, Richard Neudegg, stated: “Consumers have been patiently waiting for better tariff choices, and many are desperate to take advantage of cheaper rates.
“If you’re on a typical variable tariff, now could be the time to start out preserving a watch out for offers.
“The end of the Market Stabilisation Charge also on 1st April will be a positive step, taking out an unnecessary premium on deals.
“However, Ofgem’s choice to increase the Ban on Acquisition-only Tariffs for an additional yr is a big gamble.
“Although this could be cut to six months, while it’s in play, fixed deals risk being more expensive than they would otherwise be, at a time when customers are finally hoping to lock in some certainty.”
Source: information.sky.com”