Have energy prices fallen? No – but average usage has

The eagle-eyed among you may have noticed a small drop in the prices we give for energy tariffs on MSE and in our weekly email. In September, for example, when we wrote about energy tariffs in the weekly email for our collective, we said the average cost of standard deals from the big six stood at £1,151. Yet now we’ve started quoting it at £1,132.

I’d like to say that, under the intense scrutiny the market’s faced recently, suppliers have had a change of heart and cut prices. But unfortunately this drop is down to a far more mundane reason.

Ofgem, the energy regulator, has recently reviewed its catchily titled ‘Typical Domestic Consumption Values’ – this is essentially the amount of energy your average low, medium and high-use household would get through in a year.

In this review, it decided we’re using less energy, in particular gas. So from 1 October, every time we give a tariff price for a typical user, it’s based on the assumption of slightly lower use.

What is typical use?

It’s a certain amount of kilowatt hours (kWh) that Ofgem has calculated to represent what a typical home uses.

It covers low, medium and high users, for people with standard credit and prepayment meters, and for those with Economy 7 meters.

For the most part, sites like ours will only use medium usage for people with standard gas and electric credit meters.

How has it changed?

It’s a very minor change. For medium, typical usage – what we use to compare energy prices – the only difference is lower gas usage.

Ofgem now thinks the typical household uses slightly less gas – a total of 12,000 kWh over a year. Before the change, typical use of gas was set at 12,500 kWh.

Typical electricity use has remained the same, at least with medium use, at 3,100 kWh.

So am I paying less?

No, you’ll be paying the same as you were (unless you’ve recently switched) – no firms gas or electricity unit rates or standing charges have changed as a result of this.

It’s only average, typical-use prices that will be different, with a drop of about £10 to £20 on most tariffs. And this is only a measure that’s used so tariffs can be easily compared.

What you actually pay will always depend on your specific usage, the region you live in and the way you pay for your energy.

If you think you’re paying too much and want to pay less, the best thing to do is a full market comparison of energy deals – most can still save £100s/year by switching their energy provider.

For example, using the new typical usage figures, someone on a big six standard tariff pays £1,132/year on average. Most people are still on standard tariffs, yet the cheapest fix costs just £820/year. That’s a saving of more than £300/year.

Yet some, especially those with higher usage, can save much more – to see what you can save, do a Cheap Energy Club comparison.