Energy bills set to fall by £300 a year from April, analysts predict
Analysts predict that energy bills could drop by over £300 a year from April due to a decrease in wholesale gas prices.
Cornwall Insight forecasts that average bills will fall by 16% on the previous quarter, potentially reaching their lowest since Russia's invasion of Ukraine. The prediction is that Ofgem's price cap, which represents the average annual bill for a typical household in Great Britain, will drop from the current £1,928 to £1,620 from April £40 lower than it predicted in December.
Moreover, it is expected that prices will stay lower than the current cap throughout 2024, dropping to £1,497 a year in July before slightly rising to £1,541 in October. Despite tensions in the Red Sea, the prospect of lower energy bills hasn't been derailed and European gas stocks remain at higher-than-expected levels for this time of year, reflecting the relatively mild winter.
This, along with "fairly healthy supply conditions", has seen wholesale prices fall since November. However, despite the recent wholesale price drop, UK energy prices are still vulnerable to global events, and any potential disruption to supplies would "weigh on market confidence, and we will need to keep a close eye on market fluctuations over the next few months".
Craig Lowrey, a principal consultant at Cornwall Insight, reassures UK households: "Concerns that events in the Red Sea would lead to a spike in energy bills have so far proved premature, and households can breathe a sigh of relief that prices are still forecast to fall. Healthy energy stocks and a positive supply outlook are keeping the wholesale market stable.
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"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.
He added: "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."
Mr. Lowrey concluded with some advice for the future: "Whether we can achieve long-term reductions in the UK's energy costs will hinge on breaking free from the volatility of imported energy prices. 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."
Which? Energy editor Emily Seymour commented: "Millions of households across the country will be relieved to hear energy bills are still predicted to fall in April. If you're on a variable tariff, then any reductions to the price cap will be automatically applied in April.
"If you are on a fixed deal and think you might be paying more than the new rates come the spring, then it's worth checking the exit fees to see if you can leave early if prices do fall below the cost of your fixed tariff. In the long term, a properly targeted social tariff is desperately needed to ensure the most financially vulnerable are able to afford their energy bills."
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
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