UK Regulated Gas Prices Fall
Thanks to falling wholesale prices, the default price cap is set to fall from £1,254 ($1,522) to £1,179 from 1 October for this winter period (October-March), regulator Ofgem said August 7. The pre-payment meter cap will fall from £1,242 to £1,217 per year for the same six month period. Some 15mn households are protected by the price caps.
Wholesale energy prices have significantly fallen between February and June 2019 thanks to plenty of pipeline gas and LNG. The wholesale energy cost element of the default tariff cap fell by £75 to £446 while other costs, such as VAT and supplier profits, fell slightly. The wholesale commodity price has fallen further than that small figure suggests; but the bill includes levies and distribution and transmission costs.
Price caps require suppliers to pass on any savings to customers when their cost to supply electricity and gas falls. "These customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it," Ofgem CEO Dermot Nolan said.
“Households can cut their bills further in time for winter, and we would encourage all customers to shop around to get themselves the best deal possible for their energy.” However cheaper tariffs still are often available if customers take the trouble to investigate.
The new energy and clean growth minister Kwasi Kwarteng said: "Increased competition in the UK energy market facilitated by the energy price cap has enabled more suppliers than ever before to enter the market, driving the innovation and value that we all want to see.”
There have been a number of failures in the retail sector, with about 11 companies going bankrupt in the last year, as well as some high-profile new entrants such as Shell's First Utility.
Kwarteng replaced Claire Perry in July when Angela Leadsom replaced Brexit opponent Greg Clark as the minister for business, energy and industrial strategy in Boris Johnson's new cabinet. Kwarteng, a Cambridge University classics graduate and a doctor in economic history from Harvard University, had been parliamentary under-secretary of state in the Department for Exiting the European Union since November 2018.