While the price cap is expected to fall by around £270, actual bills will decline by slightly less because the regulator also plans to announce a raft of new levies.
Ofgem has already announced a new charge of £16 per household to help suppliers cope with the £3bn of debts built up by householders during the energy crisis, which are now unlikely to ever be recovered.
Other announcements expected from Ofgem include new charges to cover the cost of prepayment meters, adjustments to standing charges and a review of the costs incurred and charges made by power generators during the 2022 energy crisis.
The regulator is scrapping what is known as the prepayment meter premium, the term for the average £21 extra cost faced by households who pay for energy in advance. Those extra costs will in future be spread across all energy bills, potentially adding around £11 a year.
It means those paying by direct debit, who tend to be better off, will be subsidising those who struggle to pay.
Another addition to bills will come from an adjustment to the standing charge system. These are the fixed charges covering the cost of maintaining the pipes and wires that bring energy into homes. Costs in rural areas can be much higher than in urban areas.
Some have called for abolition of standing charges with the costs added to the unit prices for power and gas instead. However, this would penalise groups that use a large amount of energy, such as those with health problems that require extra heating or home dialysis.
A consultation on standing charges launched last November has generated 40,000 responses, which Ofgem is still analysing. However, the regulator is expected to propose an interim solution that will affect bills from April.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
