Energy bills are due to fall by hundreds of pounds for the typical household from the start of April, as international gas prices dropped in recent weeks, new forecasts have suggested.
Experts said that bills could fall to their lowest point in a little over two years. Worries that the recent flare-up in hostilities in the Middle East could push up prices significantly have so far seemed largely unfounded, and the impact of strikes in Australia has also proven limited.
It means that, according to Cornwall Insight, households on the price cap tariff will pay 24.09p per unit of electricity and 5.96p per unit of gas they use from April 1.
The recent stabilisation of international energy markets has trickled down to April’s price cap predictions, raising hopes that this downward path will continue throughout the remainder of 2024
It means that the typical household, which uses around 2,700 units of electricity and 11,500 units of gas, will see its bills fall from £1,928 per year to just £1,660.
As bills are decided partly by how many units a household uses, those who use less will pay less than £1,660, and those who use more will pay more.
BFY, another energy consultancy, separately estimated that the typical bill would be around £1,650, although it warned that there is a margin of error of £100 either way.
Cornwall said that the price changes could be here to stay for a while, although only if there are no big changes in international markets.
The typical bill will fall further to £1,590 from July before rising slightly to £1,640 from October next year. The further away the prediction is the more uncertainty there is about it.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Current forecasts of price cap dips later in the year may offer a small light at the end of the tunnel.
“The recent stabilisation of international energy markets has trickled down to April’s price cap predictions, raising hopes that this downward path will continue throughout the remainder of 2024.
“However, history has shown that the wholesale energy market is highly volatile, and unexpected global events can lead to spikes in energy prices, ultimately feeding through to household bills – as we saw this time last year.
“Whether concerns in the Red Sea become heightened, or another potential disruption to supply occurs, there are no guarantees the price cap will not rise again.”
Cornwall said that over the last month there has been a significant decline in wholesale energy prices. Natural gas cost around £1.30 per therm in early November, but now costs 82p.
It said that the European winter has so far been mild, which means that countries across the continent still have big buffers in their gas storage sites.
Dr Lowrey added: “Ultimately, waiting and hoping that we will avoid another global incident that sends energy prices climbing is not a sustainable strategy for Government.
“To achieve substantial reductions below pre-crisis levels, we must focus on long-term strategies which increase domestic renewable energy sources and reduce our reliance on volatile imports.”
