Annual energy bills predicted to fall by £22 in January

Household energy bills are expected to fall slightly in the new year, according to consultancy Cornwall Insight.

The forecaster, who is widely respected for the accuracy of his predictions, expects homes using normal amounts of gas and electricity to pay £1,733 from January.

This would mean a reduction of £22 per year, or 1%, from the current price cap of £1,755 for a typical household’s annual energy bill.

But Cornwall Insight’s chief consultant, Dr. Craig Lowrey warned the fall was “only part of the picture” as bills rose again in April.

“This time the increase is not due to high wholesale prices,” he said.

“The government has promised to reduce bills with the promise that investment in renewables will reduce our dependence on global energy markets and stabilize bills.

“But what we’re seeing now is a shift; wholesale prices are no longer the main story. The real pressure comes from rising non-energy costs; taxes and policy decisions on investments in renewables are driving up bills.”

Regulator Ofgem will announce the latest price cap (the maximum amount suppliers can charge customers for average energy use) at the end of November.

The energy price cap covers around 22 million households in England, Wales and Scotland and is set by Ofgem every three months.

It is based on the cost of each unit of energy, not the total bill; Therefore, those who use more energy pay more.

Ofgem’s ceiling price hit a record high of £4,279 in January 2023 as energy prices rose in response to the easing of Covid restrictions and Russia’s full-scale invasion of Ukraine. The government’s energy price guarantee has protected consumers from rising costs, changing the price cap and limiting average annual bills to £2,500 for a typical household.