The cost of household energy will fall only slightly over the coming winter and will remain well above historic levels despite Ofgem lowering its price cap this weekend, according to the latest forecasts.
From Saturday, the maximum amount suppliers can charge per unit of gas and electricity will fall to the equivalent of £2,074 for the usage of a typical household in a year.
That bill is expected to dip further to just over £1,870 from October, analysts Cornwall Insight said on Thursday, then rise slightly from January next year to just over £1,900.
Billpayers, however, are unlikely to feel much better off despite the decline. The energy price cap is still almost double the level paid by households before Russia’s invasion of Ukraine triggered record global gas prices last year.
Cornwall forecasts are also based on the lower estimate for the energy use of a typical household, which the energy regulator will adopt for its calculations later in the year. This change means the cap for the coming winter appears lower when expressed as a typical annual energy bill.
after newsletter promotion
If Ofgem were to use the same energy use estimates it currently applies, then the cap would appear about £100 higher at just over £1,978 from October and just over £2,004 from January next year, Cornwall Insight said.
Craig Lowrey, a principal consultant at the forecaster, said: “While typical household predictions may provide some insight for consumers, households are still facing the challenge of bills that are well above historic levels.”
The UK’s stubbornly high energy bills have reignited concerns that while the price cap can protect bill payers against unfair prices by accurately reflecting supplier costs, it is unable to make energy bills affordable when market prices are at historic highs.
Lowrey said there should be a “sense of urgency in implementing necessary changes” such as social tariffs, which are set below the cost of supplying energy, and energy efficiency schemes to help lower bills.
“The protection of vulnerable households from high energy bills remains a pressing issue that requires immediate attention,” he said.