Energy price cap expected to fall bringing down bills, says analyst

Business

Spring energy bills are projected to ease as energy markets stabilise, according to a closely-watched forecast.

Energy bills in the three months from April to June are projected to fall 16% to £1,660 a year for the average user, according to research firm Cornwall Insight.

It’s a £268 drop from the energy cap from next month.

But the firm cautioned that the wholesale energy market is highly volatile and unexpected global events can lead to spikes in energy prices, affecting household bills – as happened this time last year.

Homes are particularly vulnerable to price shocks, such as the one when Russia invaded Ukraine, said the principal consultant at Cornwall, Dr Craig Lowrey.

“The current scarcity of fixed deals lower than the cap further complicates the situation. With few affordable alternatives, households are left at the mercy of market fluctuations,” he said.

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Concerns about the energy price impact of the Israel-Hamas war have not materialised and wholesale prices fell since mid-November as European gas stores are fuller than expected, thanks to a mild winter so far.

Bills, however, will remain above the average before the outbreak of war in Ukraine.

At the moment, typical yearly energy bills cost £1,923 and will be an average of £1,928 a year from January to March.

Despite the warning, bills are expected to come down again when the following energy cap comes into effect in July.

From then, the typical bill for a dual fuel customer will drop to £1,590 before rising to £1,640 in October.

The regulator, Ofgem, puts a cap on the amount energy providers can charge per unit of power every three months. Those caps have come down as wholesale oil and gas prices have fallen.

But volatility in energy markets has brought back increases.

To avoid this vulnerability Cornwall Insight again said domestic renewable energy production should increase and Britain should wean itself off energy imports, if consumers are to avoid future shocks

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