Energy bill prices could fall quicker than expected – but would still be at least £2,478 a YEAR

Economy
By Liam

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Utility bill prices could fall faster than expected, analysts say, but would still hit a minimum of £2,478 a year for an average home this summer

  • The average utility bill could fall to £2,478 in July, according to bank Investec
  • This is the most optimistic energy forecast to date, but still prohibitively expensive for many
  • Most homes are protected from the highest bills by a government guarantee

By Sam Barker This is money

published: | Updated:

Energy bills could fall faster than expected this year, according to bank Investec.

The analysts say Ofgem’s energy price cap could now drop to around £2,478 by July 2023, thanks to milder-than-forecast weather.

The price cap limits how much the typical household will pay per year for average gas and electricity consumption, if it has a variable rate agreement and pays by direct debit.

This cap is £4,279 per annum for the January to March 2023 period, with energy experts at Investec previously predicting it could drop slightly to £3,458 in April, £2,640 in July and £2,704 in October.

But Investec now thinks the price cap will be £3,317 in April, then £2,478 in July and £2,546 in October.

The British have been shocked by skyrocketing energy bills due to the Russian war against Ukraine and the British government’s lack of attention to the energy market

However, more than 80 per cent of UK homes now have energy bills capped by the price cap.

However, most households will be protected from paying bills as high as the price cap, thanks to the energy price guarantee unveiled by the government last year.

This limits the amount paid by a typical UK household to £2,500 a year until the end of March 2023. The limit will then be raised to £3,000 until April 2024.

It means that if the Ofgem price cap were to fall to £2,478 in July, it would be lower than the price guarantee.

Unusually warm weather across Europe and high levels of gas in storage have caused gas prices to fall, Investec said.

Rival analysts from Cornwall Insight believe the price cap will be slightly higher at £3,545 in April, £2,800 in July and £2,835 in October.

The next official price cap update from Ofgem is on February 27, 2023.

Thirteen energy companies, with about 2 million customers together, have gone bankrupt since the beginning of September 2021 as a result of the sky-high energy price.

The Energy Bill Support Scheme, which gives households a grant of £400 to help with their winter energy bills, expires in April this year.

Payments have been made monthly since October, the last in March.

What energy support is offered?

As prices rise, energy companies are increasing their support for customers, including extra financing for customers in fuel poverty.

Suppliers in the UK provide discretionary support of around £54m on top of the more than £1bn in mandatory schemes they run each year, according to Energy UK.

Think of the Energy Company Obligation and Warm Houses Discount.

Suppliers have already implemented payment breaks, payment plans, and credit advances to customers on prepayment meters.

Other measures include:

  • Eligible British Gas customers will be offered grants of between £250 and £750
  • EDF Energy is reaching out to 100,000 vulnerable customers to offer them tailored assistance and access to apps such as Energy Hub, which can help them reduce their bills by an extra £100
  • Octopus set up a £5 million fund at the start of the energy crisis to help customers unable to afford living expenses
  • Utilita introduces an emergency fund to help customers write off debt

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