Ofgem will cut the energy price cap by 7% from 1 October, taking the typical annual bill from £2,074 to £1,923. That is £122 back in the pocket of every household on a standard variable tariff, the first meaningful fall since the crisis began. But the headline masks a stubborn detail that matters more to homeowners than the unit-rate drop: standing charges are barely moving.
As reported by MSN, the cut follows a dip in wholesale gas prices. But the daily standing charge, the fee you pay just to be connected, will fall by only about 2% for electricity and 1% for gas. For a typical dual-fuel household that means still paying roughly £330 a year in standing charges alone, regardless of whether you use one kWh or a thousand.
Who the cap cut helps, and who it leaves cold
If you live in a draughty 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity, the £122 saving is real. You will notice it on the direct debit. But if you have already insulated your loft, installed solar panels, or switched to a heat pump, your unit-rate consumption is much lower, perhaps 4,000 kWh of electricity and barely any gas. For you, the standing charge eats up a far bigger slice of your bill. The cap cut delivers perhaps £30–£40 a year, while the standing charge still costs you £330.
Ofgem has acknowledged the problem. In June it proposed a review of standing charges, but no changes are expected before 2025. The regulator’s own data shows that low-energy households, exactly the kind Axiom readers are building, subsidise high-use neighbours through the standing charge mechanism. The catch is that any reform risks shifting costs onto vulnerable households who cannot reduce their usage, so the politics is slow.
What this means for your eco-upgrade maths
The 7% cut does not change the investment case for a heat pump, solar array, or triple glazing. Those upgrades deliver savings of £400–£1,000 a year on a typical home, far exceeding the £122 cap cut. The Energy Saving Trust calculates that a 4 kW solar PV system on a south-facing roof in Manchester saves about £550 a year on electricity bills at current rates. A well-installed air-source heat pump can cut heating costs by 20–30% compared with a gas boiler, depending on your insulation level.
What the cap cut does change is the payback period, slightly. If you were looking at a 10-year payback on solar, that might now stretch to 10.5 years because the unit rate you avoid paying is a bit lower. But the long-term trajectory is clear: wholesale gas prices remain volatile, the carbon price is rising, and the grid is decarbonising. The 7% cut is a pause, not a reversal.
The EPC angle you should not ignore
Your Energy Performance Certificate measures the cost of heating and lighting your home using standardised assumptions about energy prices. When the price cap falls, the EPC software, which uses a fixed price per kWh, does not instantly update. But the government’s planned changes to EPC methodology, due in 2025, will use dynamic price data. That means homes with heat pumps and solar will look even better on paper because their running costs will be lower relative to gas.
For now, the practical advice is unchanged. If you are planning a heat pump, check your EPC rating first: you need loft insulation to at least 270 mm, cavity wall insulation where possible, and draught-proofing. The £7,500 grant under the Boiler Upgrade Scheme is still available until March 2028. Apply through your local installer or via gov.uk. If you are considering solar, the 0% VAT on installations runs until 2027.
What to do this quarter
Households on standard variable tariffs do not need to switch suppliers to get the 7% cut, it is automatic from 1 October. But if you are on a fixed deal that expires soon, compare rates now. Some fixed tariffs are cheaper than the cap, though most require exit fees. Check on a Ofgem-accredited comparison site.
For those planning eco-upgrades, the window for the Boiler Upgrade Scheme is open. The cap cut does not affect eligibility. If you are in England or Wales, submit your application before you install. In Scotland, the Home Energy Scotland grant offers similar support. Do not wait for the next cap announcement, the grants are time-limited and the best savings come from reducing demand, not hoping for lower unit rates.
Frequently Asked Questions
No, the saving from solar depends on the unit rate you avoid paying, which has fallen by about 7%. But a typical 4 kW system still saves around £500–£550 a year. Glazing is standard-rated for VAT at 20%. The zero rate for energy-saving materials covers insulation, heat pumps and solar panels; HMRC names secondary and double glazing as excluded (VAT Notice 708/6).
Standing charges cover fixed network costs, maintaining pipes, wires, and meters, which do not change with wholesale gas prices. Ofgem is reviewing the structure, but reform is politically difficult because any shift would raise costs for high-use, often vulnerable, households.
