Bills in England, Wales, and Scotland are expected to drop by around 7 per cent, Cornwall Insight says, providing some relief to consumers amid the ongoing cost of living crisis.
Ofgem, the energy regulator which is responsible for setting the upper limit on what energy suppliers can charge customers, is expected to formally announce the updated price cap on Friday.
The typical annual household energy bill rose to £1,849 per year – an increase of £111 – last month. For those who pay their bills every three months by cash or cheque, it increased to £1,969.
The energy price cap covers around 22 million households and is set every three months by Ofgem.
Between 1 April and 30 June this year, gas prices are capped at 6.99p per kilowatt hour (kWh), and electricity at 27.03p per kWh.
Why is it price cap changing?
According to Cornwall Insight, the forecast has increased slightly since its last prediction, mainly due to increases in the energy wholesale markets.
A decision is due from the regulator on a longer-term solution ahead of the coming winter.
But a range of factors could shift these forecasts, it said, including changing weather patterns, the relaxation of EU gas storage rules, ongoing debates around US tariffs, and the continuing impact of the war in Ukraine.
“This is not the moment for complacency. The Government must continue to explore targeted support, including social tariffs, to ensure those most in need are not left behind as the market evolves.”
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Like Dr Lowrey, he pointed out that energy costs are still linked to volatile global fossil fuel markets, leaving families exposed to future price shocks.
“Without this long-term action to fix the root causes of cold, damp homes, the predicted drop in energy bills is just a temporary reprieve, not a real solution.”
Is now a good time to fix your energy bill?
Checking comparison sites can help you find the best deal.
“Continued geopolitical pressures mean that the direction of travel for energy prices isn’t clear cut. For those considering a fixed-rate deal, this could be a chance to lock in lower prices and shield themselves from future market volatility.
What are the current cheapest deals?
Depending on your household and usage will depend on the size of your bill.
“There are a number of fixed deals on the market already cheaper than the predicted July rates, and we’re seeing the biggest savings versus the price cap since autumn 2020.
The cheapest current deal is with Outfox the Market, on a 12-month plan, costing an average of £1,517 – already over £300 less than the current cap.
Bigger brands Eon Next and Ovo Energy offer 12-month rates of £1,597 and £1,611, respectively.
How a typical household could save cash on their energy bill
For a three-bedroom house in London using 233kWh electricity and 536kWh gas per month, Compare the Market estimates you will currently pay around £122 per month, lower than the current price cap.
Should you use more energy, your bill could be much higher.
However, there are some cheaper deals out there, including:
E.ON Next, which has a 12-month fixed tariff that will cost £1,261.70 per year – £105.14 per month – and save this example household £17.83 per month. But there is a £100 exit fee if you want to leave early. Tulo Energy has a 12-month fixed deal that will cost £1,273.01 per year – £106.08 per month – and save this example household £16.83 per month. This deal comes with a £120 exit fee. So Energy, which again offers a 12-month fixed deal that will cost £1,276.39 per year – £106.37 per month. Like E.ON Next, it comes with a £100 exit fee. Read More Details
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