Energy bills are expected to drop significantly from the start of July, according to new analysis released on Tuesday.
Energy industry consultancy Cornwall Insight said it thinks the price cap on energy bills will fall by more than £1,200 for the average household when it is next updated.
However, because the Government bill support, which has artificially lowered bills, will fall away, households will only be around £437 better off per year on average.
Our new price cap calculations forecast a typical household on a variable tariff will pay £2,062 p/a from July – our predictions have shifted just £38 since March.
Is the market stabilising? What could this mean for fixed rate tariffs? Find out more below:https://t.co/7YCKJj1gSP
— Cornwall Insight (@CornwallInsight) May 9, 2023
The analysts at Cornwall said they expect the price of electricity will drop to 29.55p per unit from the start of July from 33.2p today with Government support.
Gas prices will fall from 10.3p today – including Government support – to 7.55p from the start of July.
It will mean that the average household pays around £2,063 per year for their gas and electricity, though this will vary based on how much energy they use.
The price cap will be changed again in October to bring the average bill to around £2,098, before hitting approximately £2,163 next January. The current Government support means that average bills are around £2,500.
We are predicting a typical household on a dual fuel variable tariff will pay:
July – Sept 2023: £2,062 p/aOct – Dec 2023: £2,098 p/aJan – Mar 2024: £2,162 p/a
Keep up-to-date with our forecasts on our new price cap predictions page: https://t.co/1leD1OFvsj pic.twitter.com/pjpKLse0ga
— Cornwall Insight (@CornwallInsight) May 9, 2023
Dr Craig Lowrey, a principal consultant at Cornwall Insight, said energy suppliers might start offering more deals that lock customers into a fixed price for a year or more.
These deals could give customers certainty over the price of their energy bills, and protect them if energy bills start to rise. However it is a gamble for households because, if they lock in a price and energy costs fall further, they could be left out of pocket.
“As the wholesale energy market has levelled out in recent weeks, our predictions for the price cap have followed suit,” Dr Lowrey said.
“Some energy suppliers will potentially look to leverage this opportunity to bring back fixed tariffs on or around the price cap, with stable projections lowering concerns they will lose out over the fixed term.
“This potential re-emergence of competitive tariff propositions presents an opportunity for households to finally get a grip on their energy bills, having been hit hard by the energy crisis.
“While this seems positive, fixing energy tariffs is a gamble – the market may go down as well as up, and households run the risk of getting locked into bills higher than the price cap.
“This leaves our predictions for the end of this year and beyond potentially vulnerable to change.”
“What we do know is, while energy bills may begin to stabilise, they are still far from returning to pre-2020 levels.
“While consumers may feel more secure, we must not under-estimate the fact that these bills remain unaffordable for many households.”
