Energy bills may drop dramatically from the start of July, according to new analysis released this week.
Energy industry consultancy Cornwall Insight said it thinks the price cap on energy bills could fall by more than £1,200 for the average household following the next update. Despite this, the government bill support, which artificially lowered bills, will disappear.
This means the average household will only be around £437 better off per year on average. The analysts at Cornwall said they expect the price of electricity will drop to 29.55p per unit from the start of July from 33.2p today with government support.
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Gas prices may fall from 10.3p on Tuesday (May 9) to 7.55p from the start of July. This could mean that the average household pays around £2,063 per year for their gas and electricity, although this may vary depending on a household's use.
Dr Craig Lowrey, a principal consultant at Cornwall Insight, said energy suppliers may start offering more deals to lock customers into a fixed price for a year or more. Such deals could give customers more certainty over the price of their energy bills and protect them from rising prices in the future.
However, households could be off worse if they lock the price then energy costs fall further. “As the wholesale energy market has levelled out in recent weeks, our predictions for the price cap have followed suit,” Dr Lowrey said.
“Some energy suppliers will potentially look to leverage this opportunity to bring back fixed tariffs on or around the price cap, with stable projections lowering concerns they will lose out over the fixed term. This potential re-emergence of competitive tariff propositions presents an opportunity for households to finally get a grip on their energy bills, having been hit hard by the energy crisis.
“While this seems positive, fixing energy tariffs is a gamble – the market may go down as well as up, and households run the risk of getting locked into bills higher than the price cap. We are faced with several uncertainties as we look beyond the July price cap, with ongoing consultations on the cap modelling and other legislative changes that could potentially bring significant changes.
“This leaves our predictions for the end of this year and beyond potentially vulnerable to change. What we do know is, while energy bills may begin to stabilise, they are still far from returning to pre-2020 levels.
“While consumers may feel more secure, we must not under-estimate the fact that these bills remain unaffordable for many households.”
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