Ofgem re-published the updated default tariff price cap levels for charge restriction period 11a, covering 1 October to 31 December 2023, on 1 October 2023, with all figures restated on the 2023 Typical Domestic Consumption Values that took effect the same day1. The re-publication followed the original 25 August 2023 announcement of the same cap period, which was expressed in the older 2019 consumption values2. Only the letter was updated; the cost allowance models and annexes were unchanged from August1.
The dual fuel direct debit cap for the period is £1,834 for a typical customer, a reduction of £142, or 7%, on the previous level1. The standard credit cap is £1,959, down £150 or 7%, and prepayment customers have a cap of £1,861, down £121 or 6%1. For electricity only customers on Economy 7 meters, the direct debit cap is £1,219, a fall of £95 or 7%1. The 2023 values assume 2,700 kWh of electricity, 11,500 kWh of gas and 3,900 kWh of electricity for Economy 7, against 2,900 kWh, 12,000 kWh and 4,200 kWh previously1. Ofgem stated that the change in consumption values does not itself affect consumer bills, and that unit rates and standing charges for the period are unchanged from the 25 August announcement1.
| Cap level, dual fuel | 1 Jul to 30 Sep 2023 | 1 Oct to 31 Dec 2023 |
|---|---|---|
| Direct debit | £1,976 | £1,834 |
| Standard credit | £2,108 | £1,959 |
| Prepayment | £1,982 | £1,861 |
| Economy 7 (direct debit) | £1,314 | £1,219 |
Source: Ofgem annexes to the 25 August and 1 October 2023 letters1.
Ofgem attributed the movement mainly to a fall in the wholesale cost allowance, from £994 to £898, and to the adjustment allowance dropping from £62 to £11 as costs allowed for last year were fully recovered1. It also revised the EBIT profit margin allowance to include fixed and variable elements, adding £6 to the cap, partly offset by removing a temporary £7 allowance for Renewable Obligation ringfencing, a net £2 impact annualised1. An industry modification, UNC mod 840, reduces the prepayment cap by £49, while a new 12 month allowance for bad debt linked to additional support credit adds £9 to the prepayment cap1.
"Today we have re-published the updated cap levels for charge restriction period (“cap period”) 11a, covering the three months from 1 October 2023 to 31 December 2023 where all figures reflect the latest (2023) Typical Domestic Consumption Values (TDCV), which came into effect on 1 October 2023."
Why it matters for households
The cap sets maximum unit rates and standing charges, not a maximum bill, so a household's total depends on how much energy it uses1. The headline figure changed between August and October without any change to the rates themselves, because the assumed usage of a typical home was revised downwards1. Households comparing the £1,923 figure announced in August with the £1,834 figure published in October are looking at the same rates expressed against different consumption benchmarks1. The gap between payment methods also matters for energy independence at home: standard credit customers pay £125 more than direct debit customers for the period, and prepayment customers £27 more1. Ofgem said the prepayment differential is primarily based on the higher cost for suppliers to serve those customers1.
The cap remained below the Energy Price Guarantee, which stayed in effect at £3,000 until April 2024, so Ofgem's cap rather than the guarantee set maximum prices for direct debit and standard credit customers on default tariffs1. Prepayment customers continued to receive guarantee support to address the cost differential until 31 March 2024, with levelisation rates to be published by the Department for Energy Security and Net Zero1.
What happens next
Ofgem said the outlook for the following cap period, January to March 2024, did not at that point suggest a further material reduction in costs, though this remained uncertain1. The guarantee was to remain at £3,000 until April 20241.
Sources2 cited
- Default Tariff Cap update, ofgem.gov.uk
- Default Tariff Cap update, ofgem.gov.uk