Energy bills to fall by more than £100 – but predictions say they will rise again

Business

The average annual energy bill will be £506 cheaper than a year ago from July, the sector’s regulator has announced.

The energy price cap – which limits what can be charged per unit of energy – is due to fall from the month after next.

It means the average annual bill will be £1,568 a year, 7% less than at present.

But while the July figure is a reduction, bills are still more expensive than before.

Before the energy price shock caused by Russia’s invasion of Ukraine a standard 12-monthly bill was £1,084 in the summer of 2021.

So compared to three years ago, energy is costing homes an extra £484.

During the current period from 1 April to 30 June, the energy price cap is set at £1,690 per year for a typical bill.

More on Energy Price Cap

Energy regulator Ofgem sets the cap four times a year, with the latest announcement applying from July to September.

The overall rate of inflation which came down in April was in large part thanks to the current higher cap which came into effect that month and brought prices down for energy users, the Office for National Statistics.

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Ofgem chief executive Jonathan Brearley says the adjustable price cap has been fair but may not be fit for the future.

Ongoing cost of living crisis

Many households are in debt to energy providers.

“The fall in the energy price cap reduces bills slightly, but our data tells us millions have fallen into the red or are unable to cover their essential costs every month,” said the chief executive of Citizens Advice Dame Clare Moriarty.

“People cannot rely on lower energy prices alone to escape the financial issues they’ve been experiencing. That’s why we need better targeted energy bill support for those really struggling to keep the lights on or cook a hot meal.”

More expense to come

Latest forecasts suggest bills will rise again coming into winter as wholesale gas costs are on the up.

Respected research firm Cornwall Insight said it expects the fall announced today “may be temporary”.

Gas prices reached four-month highs earlier this week on concerns that Russia could halt gas flows to Austrian multinational oil, gas and petrochemical company OMV and that US exports to Europe may be damaged by a contractor at a Texas terminal filing for bankruptcy protection.

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