Energy price cap forecast to fall by 14% in April

UK households can expect some respite from soaring energy costs next year, as new forecasts predict a significant decrease in the average energy bill.

According to industry analysts Cornwall Insight, the average bill is set to fall to £1,660, marking a notable decline from the current rates.

The average household currently faces annual gas and electricity bills of £1,834, in line with the Ofgem price cap that determines prices for over 80% of homes.

This figure is set to increase by £94, reaching £1,928 from 1 January, as stated by the energy regulator Ofgem.

This capped price of £1,928 will remain in effect until April 2024, although individual household bills will vary based on their energy consumption.

The April 2024 price cap is then forecasted to show a 14% decrease.

This reduction will bring the typical dual fuel consumer’s annual bill down to £1,660, a £268 decrease from January.

The downward trend in energy prices is anticipated to continue throughout the year, with a further drop to £1,590 in July before a slight increase to £1,640 from October. This projection is based on the latest market data and analysis from Cornwall Insight.

The decrease in the price cap is attributed to the significant decline in wholesale energy prices since mid-November. Despite concerns over international conflicts and potential disruptions in energy supplies, such as LNG production strikes in Australia and pipeline issues, these events have not materially impacted energy supplies.

Additionally, a relatively mild winter has kept European gas-in-store levels above expectations, contributing to the decrease in wholesale prices.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight, emphasized that while the current forecasts offer a glimmer of hope, the volatility of the wholesale energy market means there are no guarantees against future price hikes. He noted that global events have historically led to spikes in energy prices, impacting household bills.

Natalie Mathie, an energy expert at Uswitch.com, also commented on the forecast, stating that although the potential fall in the price cap could bring relief to consumers, the upcoming winter months still pose a challenge with high energy bills. She highlighted the difficulty for consumers to budget due to the quarterly changes in energy prices.