From October 1, 2019 onwards energy prices in Britain are set to fall following a drop in wholesale power and gas prices.
On Wednesday, in a significant development Britain’s energy regulator informed suppliers that they should lower their price cap for average annual consumption by $91.21 (75 pounds) to 1,179 pounds starting from October 1.
The development comes in the wake of a drop in wholesale power and gas prices.
In February, energy regulator Ofgem had approved an increase in bills by more than 10% to 1,254 pounds effective from April 1, following complaints from the country’s biggest suppliers, a group known as the “Big Six”, that the cap was initially set too low.
“Wholesale energy prices have significantly fallen between February and June 2019. A combination of low demand during the winter, strong gas supply and relatively healthy storage levels have pushed down wholesale prices,” said Ofgem in a statement.
The Big Six includes British Gas, SSE, Iberdrola’s Scottish Power, Innogy’s npower, E.ON and EDF Energy.
Last year, the British parliament had tasked Ofgem with setting a limit following complaints by lawmakers that consumers were being overcharged for electricity and gas.
Ofgem, which reviews the price cap every six months, had then stated it needed to allow suppliers to charge more frequently as wholesale energy contracts, used to help formulate the cap level, were higher compared to the last cap period.
The regulator “calculates the cap using a formula that includes wholesale gas prices, energy suppliers network costs and costs of government policies, such as renewable power subsidies”.
($1 = 0.8223 pounds)