Energy bills predicted to fall from July by nearly £450

Energy bills for a typical household are expected to fall by nearly £450 from July, new forecasts suggest.

Advisory firm Cornwall Insight predicts bills could fall by as much as £446 under a new official price cap that Ofgem will announce on May 25.

Because of the government’s energy price guarantee, a typical consumer pays no more than £2,500 a year for their energy.

Analysts expect the new July price cap to come in at £2,054.

Then it is expected to drop further to £1,976 in October.

Ofgem’s current cap for an average household is £3,280, but consumers are not directly affected as the government guarantee scheme has a lower threshold. That will change in July when the cap falls and the guarantee threshold rises to £3,000.

The guarantee system is to be phased out completely next March.

The state support is believed to have cost taxpayers a total of around £29.4 billion.

dr Craig Lowrey, principal adviser at Cornwall Insight, said the new cap was good news for households.

“According to these projections, the average consumer’s bills would fall by around £450 compared to the existing level of the energy price guarantee, with bills currently expected to remain relatively stable over the next nine months,” he said.

Wholesale energy prices rose when Covid restrictions were eased, then skyrocketed after Russia’s invasion of Ukraine last year.

In January, Ofgem’s price cap peaked at £4,279 and is set to reach £6,000 this year, potentially adding hundreds of pounds to monthly bills.

The Government stepped in to limit bills and also gave every household a £400 winter rebate, paid in six installments between October and March.

UK wholesale gas prices have fallen to around 70p a therm from a peak of 640p a year in August 2022.

But Cornwall Insight warned that while bills are falling, they don’t expect them to return to pre-crisis levels “at the end of the decade at the earliest”.

It added that energy bills are still around £1,000 higher compared to 2021.

“Unfortunately, it looks like these prices may become the new normal,” added Dr. Added Lowrey.

Energy is separately regulated in Northern Ireland, where bills for an average household are £1,950 a year.

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