According to fresh predictions from consultancy firm Cornwall Insight, annual energy bills could fall by 16% from the current £1,928 to £1,620 in April 2024 – this would be the lowest point in a little over two years
The Ofgem energy price cap is predicted to fall by £308 a year from April – meaning households could see their monthly bills drop very soon.
According to fresh predictions from consultancy firm Cornwall Insight, annual energy bills could fall by 16% from the current £1,928 to £1,620 in April 2024. This would be the lowest point in a little over two years and is £40 less than its December predictions.
It then expects energy bills to drop even further to £1,497 a year from July 1, compared with a previous forecast of £1,590 a year. The reduction in Ofgem’s price cap means that a typical household will see their bills drop by more than £300 a year from spring.
It is important to note that Ofgem’s price cap does not cap the energy bill, but caps what can be charged for a unity of energy. According to its predictions, those on the price cap tariff will pay 23.56p per unit of electricity and 5.73p per unit of gas they use from April. This is down from the January level of 28.62p for electricity and 7.42p for gas.
As bills depend on how many units a household uses, those who use less will pay less than £1,620, and those who use more will pay more. According to the energy regulator, the price cap covers around 29million energy customers.
Dr Craig Lowery, principal consultant at Cornwall Insight, said that “concerns” over events in the Red Sea – which were thought to lead to energy price spikes – were so far “proved premature” and household could “breathe a sigh of relief’.
He said: “Healthy energy stocks and a positive supply outlook are keeping the wholesale market stable. If this continues, we could see energy costs hitting their lowest since the Russian invasion of Ukraine.
“Though recent trends hint at possible stabilisation, a full return to pre-crisis energy bills isn’t on the horizon. Shifts in where and how Europe sources its gas and power, alongside continued market jitters over geopolitical events, mean we are likely still facing costs hundreds of pounds above historical averages for a while, potentially the new normal for household energy budgets.”
Even with this positive news, Cornwall Insight said despite the wholesale drop, UK energy prices “remained vulnerable to global events”.
To stabilise the UK’s energy bills, Dr Lowery said the country needed to “break free” from the volatility of imported energy prices added: “To make a real and lasting impact, we need to commit to a sustained transition to homegrown renewable energy sources, reducing our reliance on the volatile international energy market.”
Alongside this, Cornwall Insight highlighted that there are “ongoing consultations” on potential changes to Ofgem’s price cap, including the standing charge and bad debt collection, which could impact the overall price cap level going forward.