Millions of homes across the UK could see their energy bills drop within weeks.
Experts predict that charges for gas and electricity will decrease in July, but this might only be the start. Suppliers will also be competing for business again, meaning prices will be driven down further, reports LancsLive.
Wholesale gas prices across Europe will also return to levels they were when the war in Ukraine broke out which skyrocketed prices, another positive sign for households. Dr Craig Lowrey, principal consultant at energy forecasters Cornwall Insight, said this will “hopefully bring some cautious optimism that the era of exceptionally high energy bills is behind us”.
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The Express reports that the fall in prices will begin with regulator Ofgem slashing its price cap on Thursday (May 25). This is expected to lower by 18%, from today's figure of £3,080 to around £2,053.
As a result, bills could drop as soon as July and 27 million households may finally benefit from the decline in European natural wholesale gas prices. This could decrease even further in October, as Cornwall Insight have predicted from their forecasts.
The mild spring weather has also helped to keep prices to a two-year low. Chris Hurcombe, chief executive of Catalyst Digital Energy, said: “Forecasts suggest temperatures will remain above the seasonal norm for the coming weeks.”
Gareth Kloet, GoCompare’s energy spokesman, said: “The trends are all moving in the right direction and bills will fall.”
Richard Neudegg, director of regulation at Uswitch.com, said if the lower energy price cap is confirmed on Thursday, suppliers will have the confidence to bring back fixed energy deals for customers. He said: “Consumers will need to decide if they want to lock in rates for a longer period, rather than risk the volatility of the standard variable tariff.”
Over the past three months, wholesale gas and electricity prices have continued to slide over, with summer 2023 contracts at 18-month lows. However, despite the ease, energy bills will still be high compared to historic prices.
Cornwall Insight predicts the energy cap will be £1,976 from October 1, before edging up to £2,045 from January 1. Simon Francis, coordinator of the End Fuel Poverty Coalition, said bills reflect transmission and trading prices, which is why they're not falling so drastically. He said: “Ofgem’s price cap allows for a profit margin of just under two per cent, so it’s in the interest of suppliers to keep bills as high as possible.”
The decision to change the energy cap quarterly, rather than twice a year allows savings to pass onto the customer quicker, he added. Matt Copeland, head of policy at National Energy Action, said falling energy bills are good news – but they are still too high.
He said: “The Government must recognise this and look to provide targeted financial support to the households that need it most in the winter to come.”
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