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New. Price Cap drop confirmed

Energy bills to fall an average 7% -but most will still pay more than last winter: 11 need-to-knows to prepare and protect your pocket

Including what you'll pay from October calc, new unit rates & should you fix?

The good news is energy bills are set to fall again from 1 October as regulator Ofgem has confirmed a 7% drop in the Energy Price Cap. This dictates what most in Eng, Scot & Wales pay (apart from a few on fixes) regardless of the firm, and will last three months.

The bad news is while this offers some relief for households this winter, energy bills remain stubbornly high, and most will still be paying more for their energy than last winter as we won't all be getting the extra Government support. Here's what you need to know:

1. The Energy Price Cap will drop by an average 7% in Oct. On Friday, regulator Ofgem announced the Price Cap will fall to £1,923/yr for a typical direct debit household from 1 Oct to 31 Dec, down from the current level of £2,074/yr.

Remember, the Price Cap is misnamed as there is NO CAP ON THE MAX YOU PAY FOR ENERGY, it's actually on the underlying rates, so use more and you pay more, plus the cap varies by region...

2. It is actually a cap on standing charges and unit rates. In practical terms, the Price Cap limits the (daily) standing charge firms can levy, and the rate you pay for each unit of energy used. While the calc's easiest for most, we know some like to see the actual rates.

We've full region-by-region rates in our guide for direct debit, prepay, and for those who pay on receipt of a bill, but here are the average gas and electricity rates for direct debit...

3. Standing charges are up again - it'll cost over £300/yr just for the facility of having gas and electricity. Under the current Price Cap, it's £300 a year on average just for standing charges, if you pay by direct debit. From October, it's rising slightly to an average £303. Higher standing charges are a moral hazard - lower users can save proportionately less and less by reducing usage.

Martin has pushed Ofgem on this - and challenged chief executive Jonathan Brearley on it after the July Price Cap was announced. Read Martin's Why are standing charges so high? What can be done about it? blog - it was written last month, but the principle still applies.

4. Most'll likely still pay more than last winter (double the one before that). Unfortunately, for most, the drop in the rate paid won't make up for last winter's £400 Government support - the £66 or £67/mth bill help everyone got from Oct to Mar. Lower users will fare worst, as the £66 was proportionately a bigger reduction on their bills.

Even with October's drop, it'll still leave people paying around close to double what they did before the energy crisis hit in autumn 2021. So far, no additional support has been announced by the Government for energy bills this winter - something Martin and MSE have pushed Energy Secretary Grant Shapps on.

5. There are cost of living payments to come for those on benefits. The first £301 benefits payment (of £900 in total) has been paid, with a further £300 to come in autumn 2023 and £299 in spring 2024. See full cost of living payments info.

6. Pensioners to get up to £600 winter fuel payment. Millions of pensioners will get up to £600 with the winter fuel payment this year, including an extra £300 top-up due to the current crisis. It's not means-tested, and will be paid automatically to those who are eligible. See pensioner support.

7. What's going to happen to bills over the next year? Sadly, the lower prices aren't guaranteed to last long, as each Price Cap is only in effect for three months (see Energy Price Cap FAQs for how it works). The current predictions are that after the October fall, it'll rise in January, before dropping again slightly over the next few Price Caps - though the further out you go, the more it is crystal-ball gazing.

Here's how the Price Cap is expected to change on average over the next 18 months, according to the latest predictions from analysts at Cornwall Insight...

So if these predictions are right, you'd pay about 5% less than the current Price Cap on average over the next year if you stayed on a Price-Capped standard tariff.

8. Should you stick, switch or fix your energy tariff? In recent weeks, we've seen the return of a handful of tariffs that undercut the current Price Cap - worth considering based on current predictions, especially if you value certainty about what you'll pay. But it's a complex decision, so see our Stick, switch or fix your energy tariff guide for all the switching options. In brief, here are some of the deals worth considering that are cheaper than the current Cap (most have £150 dual-fuel exit penalties, British Gas is £200):

See full list of fixed tariffs - including tariffs that are the same price or slightly more than the current Cap. And if you've been offered a fix and are not sure it's worth considering, see our Should you fix? calc.

- There are also cheaper variable deals that undercut the Price Cap. The Octopus Tracker tariff is for existing customers (though others can just switch first to its standard tariff, then to this) and the price changes daily based on wholesale rates. New firm Fuse has a tariff that's on average 5% under the current Cap.

9. Ovo customer with a smart meter? You could earn £10 a month in bill credit by cutting your usage at peak times midweek if you sign up to the firm's expanded 'Power Move' scheme. See Ovo Power Move for more.

10. What to do if you're struggling now, or will be this winter. If you're struggling, it's always worth talking to your energy firm. Be polite and straight with it, and make sure you explain if you're vulnerable. There can be hardship & debt grants from energy suppliers, and you may qualify for the Warm Home Discount scheme. See our full What to do if you're struggling to pay energy bills guide.

11. Can you cut your bills by cutting your energy usage? Obviously, cutting use cuts bills - and hopefully there are cuts you can make to improve efficiency that don't impact lifestyle too much.

- Start with Energy saving tips.
- Add in the Energy mythbusting guide for less clear-cut issues.
- Really struggling? See our Heat the human not the home guide (though thankfully the summer warmth helps right now).