Household energy bills in Great Britain forecast to fall by £117 a year | Energy bills
Household energy costs in Great Britain are expected to fall by an average of £117 a year from April after Rachel Reeves announced in the November budget that the cost of green subsidies would be removed from domestic bills.
The government’s quarterly energy bill cap is expected to fall following the government’s decision to shift levies used to support renewable energy projects to general taxation and scrap the ratepayer-funded energy efficiency scheme, according to leading energy consultancy Cornwall Insight.
Despite slightly higher energy market prices, analysts predict that from April the price cap for a typical dual-fuel household will fall to an average of £1,641 per year; This is lower than the current cap of £1,758 per year.
It is estimated that Reeves’ energy cost intervention will save £145 a year from the average annual energy bill, although the increased cost of maintaining and improving energy networks will partially offset these savings.
Craig Lowrey, chief consultant for Cornwall, said: “The real test will be to sustain these savings. This will not be easy as the UK continues to improve its networks and infrastructure. This investment is needed if we want a safer and more resilient energy system, after the consequences of exposure to global energy markets have become so apparent in recent years. However, there needs to be an open discussion about the fact that such a transition will not be cost-free.”
Even if energy bills fall as expected, they will remain a third higher (around £425 a year) than before Russia’s invasion of Ukraine triggered a Europe-wide energy market crisis. This is partly because gas market prices remain high due to the cost of importing more gas by tanker from the US and the Middle East, but also because they reflect the high costs of the UK’s energy transition.
The impact of wholesale gas market costs on the price cap is around £170 a year higher than four years ago, while the cost of Britain’s energy networks has risen by £143 a year over the same period.
“The most important thing is transparency — being honest with people about why these changes are happening and how they fit into a long-term plan,” Lowrey said. “Bills will not drop by two or three hundred pounds overnight, but long-term progress is possible if we stick with the transition. Ultimately, the transition to domestic energy gives us a stronger chance of achieving price stability, while providing us with greater energy security in the process.”
A government spokesman said: “This government is delivering on our promise to cut costs by an average of £150 from bills from April 1. Ofgem will set the final price cap figure next week as usual.”
