Energy bills are projected to decrease by approximately £300 annually for households with typical gas and electricity consumption, according to Cornwall Insight, a leading forecaster. This 15% drop would reduce the typical annual bill to £1,635, the lowest in over two years.
The energy price cap, which sets the maximum limit for gas and electricity unit charges, will be announced by Ofgem next week. If Cornwall Insight's prediction holds true, the annual bill for households paying via direct debit would fall by £293, bringing it down from the current £1,928. This cap affects 29 million households in England, Wales, and Scotland, with different rules applying in Northern Ireland.
Cornwall Insight attributes the expected price reduction to a milder winter and less disruption from Red Sea incidents. These factors have kept wholesale prices lower for suppliers. The forecaster anticipates further bill reductions in July, with a slight increase in October. However, global events could significantly alter these projections.
Despite the predicted decline, Cornwall Insight's principal consultant, Craig Lowrey, cautions that energy prices will remain a challenge for many. He emphasizes the need for continued vigilance, as political or economic crises could potentially drive prices back up.
Additionally, consumers owe an estimated £2.9bn to energy suppliers. Ofgem proposes raising the price cap by £16 between April and March next year to address these bad debts.