There could be a glimmer of light at the end of the tunnel if experts' energy price predictions are correct.
Energy consultancy firm Cornwall Insight has forecasted the cost of gas to be below the Government’s Price Guarantee from July this year, although the cost is still predicted to be a hefty £2,800 a year for an average family. Finance firm Investec has gone further, predicting that the Ofgem price cap on energy bills could fall to £3,317 in April, then £2,478 in July.
The price cap is currently set at £4,279 for someone with typical energy use, having risen on January 1 from £3,549. But no one currently pays this, as families are covered by the Energy Price Guarantee which has “frozen” the typical bill at £2,500. This will rise in April to £3,000 but the new predictions could mean that the typical bill falls below this from July. However, bills remain far higher than before the start of the energy crisis in 2021, when households were typically paying £1,277.
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Cornwall Insight has said that if energy costs do drop below the Government’s Price Guarantee. around 26m households will be governed once again by Ofgem ’s Price cap rather than the Government’s guarantee, which would then then it will no longer be a cost to the taxpayer.
The reason for the predicted drop in wholesale energy prices has been due to warmer-than-average Winter temperatures across Europe and high gas storage levels. The price of gas rocketed after Russia invaded Ukraine last year but wholesale costs have now fallen to pre-war levels.
Cornwall Insight said it was “positive” to see a drop in the price cap forecast however warned that household bills are set to remain high and the Government may still need to support consumers and businesses with their energy bills.
In its release, Cornwall Insight criticised the Government’s approach to energy support saying it was “clear that blanket measures of bill support” was not providing “adequate protection for the most vulnerable”.
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