Annual energy bills will fall by £129, or around 7%, in July in a welcome respite for hard pressed households, according to latest forecasts.
Analysts Cornwall Insights said the fall in the price cap on default tariffs will reduce the typical gas and electricity bill to £1,720 a year from July.
The price cap will be reset again by regulator Ofgem in October when another “modest” fall is expected. Cornwall Insights currently expects bills to come down again in January, although this could be affected by “changing weather patterns, the relaxation of EU gas storage rules, ongoing debates around US tariffs and the continuing impact of the war in Ukraine. “
Cornwall Insight is entirely independent of Ofgem but has a good track record in predicting the path of the price cap.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “The fall in the price cap is a welcome development and will bring much-needed breathing space for households after a prolonged period of high energy costs. It’s a step in the right direction, but it should be taken in context.
“Prices are falling, but not by enough for the numerous households struggling under the weight of a cost-of-living crisis, and bills remain well above the levels seen at the start of the decade. As such, there remains a risk that energy will remain unaffordable for many.
“The fall is also a clear reminder of just how volatile the energy market remains - if prices can go down, they can bounce back up, especially with the unsettled global economic and political landscape we are experiencing. This is not the moment for complacency.
“The government must continue to explore targeted support, including social tariffs, to ensure those most in need are not left behind as the market evolves.
“While there is understandably a great deal of focus on widescale market reforms such as the introduction of zonal pricing, we must recognise that such changes will take years to come into effect.
“Discussions around ways to transform the energy market are important, but we must be careful to balance the transformational reforms and the urgent need to address the affordability crisis people are facing right now.
“There are, however, reasons for optimism. The continued growth of domestically produced renewable energy is a positive step forward. It improves our energy security and helps mitigate the effects of the global price shocks we’ve seen in recent years.
“That progress needs to continue at pace, not just for the net zero transition, but to help build a more stable and secure energy future for all.”
