Energy bill prices could fall quicker than expected, say analysts – but would still be at least £2,478 a YEAR for the average home this summer
- The average energy bill could drop to £2,478 in July, according to bank Investec
- This is the most optimistic energy forecast yet, but is still unaffordable for many
- Most homes will be shielded from the highest bills by a Government guarantee
Energy bills could fall faster than expected this year, according to bank Investec.
Its analysts say Ofgem’s energy price cap could now fall to around £2,478 in July 2023, thanks to milder-than-predicted weather.
The price cap limits how much the typical household will pay a year for average gas and electricity use, if on a variable rate deal and paying by direct debit.
This cap is £4,279 annually for the period from January to March 2023, with Investec energy experts previously predicting it could drop slightly to £3,458 in April, £2,640 in July and £2,704 by October.
But Investec now thinks the price cap will be £3,317 in April, then £2,478 in July and £2,546 in October.
Brits have been rocked by soaring energy bills due to the Russian war on Ukraine and the UK Government not paying enough attention to the energy market
More than 80 per cent of UK homes are now on energy bills limited by the price cap, however.
Most households will be protected from paying bills as high as the price cap, however, thanks to the Energy Price Guarantee unveiled by the Government last year.
This limits the amount paid by the typical UK household to £2,500 a year until the end of March 2023. The cap will then rise to £3,000 until April 2024.
It means that, if the Ofgem price cap fell to £2,478 in July, it would be less than the price guarantee.
Unseasonably warm weather across Europe and high levels of gas in storage have caused the price of gas to drop, Investec said.
Rival analysts at Cornwall Insight think the price cap will be slightly higher, at £3,545 in April, £2,800 in July and £2,835 in October.
The next official price cap update from Ofgem will be on 27 February 2023.
Thirteen energy firms, with about 2million customers combined, have gone bust since the beginning of September 2021 due to the soaring price of energy.
The Energy Bill Support Scheme, which provides a £400 subsidy to households to help with their energy bills over the winter, will end in April this year.
Payments have been made monthly since October, with the last being paid in March.
What energy support is on offer?
As prices rise energy companies are increasing their support for customers, including additional funding for customers in fuel poverty.
Suppliers in the UK provide discretionary support of around £54 million on top of the more than £1 billion in mandatory schemes they deliver every year, according to Energy UK.
This includes the Energy Company Obligation and Warm Homes Discount.
Suppliers have already implemented payment holidays, payment plans and credit advances to customers on pre-payment meters.
Other measures include:
- Eligible British Gas customers are being offered grants of between £250 and £750
- EDF Energy is contacting 100,000 vulnerable customers to provide them with tailored help and access to apps like Energy Hub, which can help them reduce their bills by an extra £100
- Octopus created a £5million financial hardship fund at the beginning of the energy crisis dedicated to helping customers who are unable to afford the cost of living
- Utilita is introducing a hardship fund to help customers write off debt