The fall in the energy price cap will cost just £150 off average bills from October, experts predict
- Gas and electricity costs for millions could fall from October, analysts say
- But this could only be a short hiatus before costs begin to rise again next year
Average household energy bills will fall by just £149 in real terms, offering limited reprieve for Britons struggling with high gas and electricity costs.
Energy analysts from Cornwall Insight have predicted that the price cap on utility bills will fall to £1,823 from October, a £250 drop a year from the current energy price cap of £2,074.
Set by regulator Ofgem, the price cap dictates the price paid by more than 80 per cent of UK households using variable rate tariffs and paying by direct debit.
However, in real terms the typical utility bill will fall by £149, not £250. This is because from October Ofgem will be changing its sums for how it works out the average utility bill that Cornwall Insight is trying to predict.
The energy regulator calculates what the average energy bill with a price cap is by using what it thinks are normal amounts of electricity and gas for a home to consume.
A glimmer of hope: energy bills will come down, but only slightly, if Cornwall Insight is right
Since the start of the pandemic, Ofgem estimates that a normal house uses 2,900 kWh per year for electricity and 12,500 kWh for gas.
From October 2023, those figures will drop to 2,700 kWh and 11,500 kWh respectively, because according to Ofgem, the average home consumes less power than previously thought.
As Ofgem believes we will be using less power, the typical average bill will fall further than it would otherwise.
Without the new assumptions, the average bill would be £1,925, or £149 less than today.
The price cap changes four times a year. After October 2023, the next change will be in January 2024.
Based on Ofgem’s current energy consumption assumptions, Cornwall Insight predicts that the average energy bill will rise to £2,082 in January 2024, fall to £2,014 in April and then fall further to £1,965 in October.
Using the new assumptions, typical utility bills will fall to £1,823 in October 2023, then rise to £1,979 in January, fall to £1,915 in April and then fall to £1,867 in October 2024 – if Cornwall Insight’s forecasts are correct are.
Energy bills will rise again due to spikes in gas prices, Cornwall Insight said.
The company has predicted all previous price cap movements with reasonable accuracy.
Uswitch energy expert Nathalie Mathie said: ‘If the cap is confirmed at this level, the energy price for the average household will be 7 percent lower in October, November and December – but these are some of the coldest months of the year. and when households consume more energy.
“Despite a further drop in rates, bills are still high compared to pre-crisis levels, so households will still need to watch their energy consumption in winter.”
Ofgem will announce the exact figures for the October price cap on August 25.
Craig Lowrey, chief adviser at Cornwall Insight, said: ‘While a small drop in bills in October is to be welcomed, we are once again seeing energy price forecasts well above pre-crisis levels, underlining the limitations of the price cap as a tool to support households. underlined. with their energy bill.
“As many, including energy regulator Ofgem, have recognised, it is essential for the government to explore alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.”