Energy bills set to drop from January as UK braces for winter cold front

UK households can expect a slight drop in their energy bills from January, with new forecasts predicting a modest reduction in Ofgem’s price cap.

Experts at Cornwall Insight suggest the energy regulator’s cap will be reduced by 1 per cent, meaning an average annual saving of £22 for the typical household, dropping the bill to £1,733.

However, analysts of the expert consultancy warn that this relief may be short-lived, with the expectation that the ceiling price will increase once again from April.

Craig Lowrey, principal consultant at Cornwall Insight, said: “January’s price cap drop may seem like good news, but it is only part of the picture.

“Bills are still well above pre-crisis levels and will rise again in April, and this time the rise is not due to higher wholesale prices.”

The projected decrease in the ceiling price in January was associated with a slight decrease in wholesale energy prices.

This will also happen despite the expected introduction of a Nuclear Regulated Asset Base (RAB) tax to help fund the next generation of new nuclear power plants, which is expected to add around £10 a year to bills.

Cornwall Insight has suggested that the April price cap for the average household is likely to rise by around £75 a year, according to its latest forecast.

He said this would be largely due to rising fees related to the operation and maintenance of the country’s energy networks, particularly electricity transmission and gas distribution fees.

Mr Lowrey added: “The transition to renewable energy will bring long-term stability and energy independence, but it is not free.

“Upfront costs are real and are now reflected in invoices.

“The challenge will be to balance short-term affordability with long-term flexibility and, most importantly, to make sure people understand why this trade-off is important.”