The forecast predicts the price cap to decrease to £1,925, yet wholesale gas costs are expected to remain higher than pre-crisis levels.
New forecasts revealed that annual household gas and electricity bills are anticipated to decrease by a minimum of £150 starting from October. According to data from Cornwall Insight, regulator Ofgem is expected to announce a price cap reduction to £1,925 next week, a move resulting from the global decline in energy prices that is gradually benefitting consumers.
Consultancy analysts suggest that average bills could potentially decrease by an additional £100, should households continue to reduce their energy consumption as anticipated.
For the current period, spanning July to September, Ofgem has set the price cap at £2,074 for a typical household.
This anticipated reduction is in response to the fall in gas prices since their 2022 peak, although current prices remain elevated compared to levels before the energy crisis, which was triggered by Russia’s invasion of Ukraine.
For context, the price cap at the beginning of 2022 stood at £1,277.
The cap serves as a mechanism to limit the amount that suppliers can charge domestic consumers for each unit of energy they use. It also extends to the standing charge, which covers the cost of maintaining the infrastructure necessary to deliver energy to residences.
Dr. Craig Lowrey, a principal consultant at Cornwall Insight, commented, “While a modest reduction in October’s bills is a positive development, we are still seeing energy price forecasts that significantly exceed pre-crisis levels. This highlights the limitations of the price cap as a strategy for aiding households with their energy expenses.”
Lowrey noted that many, including the energy regulator Ofgem, recognize the importance of the government exploring alternative solutions, such as social tariffs, to guarantee both stability and affordability for consumers.
In a distinct analysis, the Energy and Climate Intelligence Unit (ECIU) expressed appreciation for the decrease in prices, but cautioned that wholesale gas costs are predicted to stay two to three times higher than pre-crisis levels for the foreseeable future.
