Energy bills are forecast to fall below £2,000 a year by the summer, bringing much-needed relief to millions of customers.
Households will begin to benefit from lower wholesale costs by July, investment bank Investec predicted yesterday.
But it points out that bills will remain “considerably higher” than in the past, presenting a “challenge” for many people.
Under the Government’s Energy Price Guarantee, an average customer is currently paying around £2,500 a year for their gas and electricity. The actual amount varies by usage.
The taxpayer is picking up the tab for the difference between the EPG and regulator Ofgem’s separate price cap – which will be £3,280 from April, and is designed to reflect suppliers’ costs.
But Investec is estimating those costs will fall to such an extent that Ofgem can slash its price cap to £1,981 a year in July, then £1,966 in October.
That is significant for the Treasury as it is well below the EPG, which will save the Government a fortune.
Millions of households have been left reeling from rocketing energy bills, adding to the cost of living misery.
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It came on the back of a leap in wholesale energy prices, which surged after Russia’s invasion of Ukraine. Those costs have begun to ease, but most households and businesses have yet to benefit.
It is the first time since December 2021 that Investec has forecast that Ofgem’s price cap will drop below the £2,000 a year mark.
The £1,981 estimate for July is down on its previous prediction of £2,056.
Investec analyst Martin Young stressed that its estimates were “volatile” given that events can change.
He said anything that lowers bills was welcome but added: “It does not disguise that these estimates are still considerably higher than historic levels.”
For context, Ofgem’s price cap in August 2021 was £1,277 a year.
