Energy tariffs are anticipated to decrease by up to 15% starting in April due to a reduction in wholesale prices.
Ofgem, the regulatory authority, is expected to announce this adjustment on Friday. According to the latest estimates from consultancy firm Cornwall Insight, the energy price cap, which currently stands at £1,928, is likely to be reduced to £1,635 from April 1.
This cap plays a crucial role in setting the limits for what energy suppliers can charge, reflecting the annual cost for an average household.
Although the proposed cap of £1,635 is about £400 more than the early 2019 rates, it still indicates significantly elevated prices historically.
Under the new cap, electricity and gas are projected to cost 23.27p and 5.96p per kilowatt hour, respectively, a decrease from the current rates of 28.62p for electricity and 7.42p for gas.
The daily standing charges, which are applicable regardless of energy usage, are also expected to increase. This rise allows suppliers to recover debts from unpaid bills, which reached a record high last year. The daily charges for electricity and gas are set to increase from 53.35p and 29.60p to 58p and 30p, respectively, as per Cornwall Insight’s analysis.
Ofgem has not yet confirmed if suppliers will be permitted to recover debts in the next price cap period, which extends from April to July.
Previous allowances for debt recovery have significantly benefited companies like British Gas, whose profits surged to £799 million last year, a tenfold increase.
