Martin Lewis predicts when energy prices could drop slightly
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Millions of households across the UK could soon breathe a sigh of relief, as energy regulator Ofgem predicts that average customer energy bills are predicted to go down within months. Jonathan Brearley, the CEO of Ofgem shared some “good news” with MPs this week, predicting that by July, household energy bills will fall below the Government’s Energy Price Guarantee. The UK has been gripped by the worst impacts of the fossil fuel energy crisis in the past year, triggered by volatile natural gas prices that have been shaken by Russia’s invasion of Ukraine.
Mr Brearley told MPs at the Business select committee: “We recognise, everyone recognises that customers are in an incredibly difficult position right now. The gas crisis has stages and right now we are seeing the full impact on customers’ bills.
“Last time we were here, over the summer, we thought that without the Energy Price Guarantee (EPG), the price might be almost £6,000 a year for the average household.
“There is some good news, the market has changed quite significantly and for the first time since the start of gas crisis we are seeing downward pressure on the prices.
“On existing projections that the EPG will be breached by price cap in July and indeed that means bills going down for customers and significantly reduces the fiscal cost for the EPG in the first place.”
Shortly after being elected as Prime Minister, Liz Truss announced the Energy Price Guarantee, which froze household energy bills at £2,500 per year from October 2022, preventing an unprecedented £3,549 price cap previously set by Ofgem.
While the EPG was set to be raised this April to £3,000, households have received a glimmer of hope, as experts at Cornwall Insight predict that energy bills are set to fall twice this year.
The research firm’s latest forecasts for the Default Tariff Cap, commonly referred to as a price cap, have found that without Government support, a typical household will pay about £3,208 from April.
While this is significantly higher than what Britons are paying right now, the price cap was previously estimated to hit £3,545.31 in the same period.
The energy experts also predicted that after the April to June quarter, households’ energy bills will tumble to approximately £2,200 from July, and would stay that way until the end of the year.
This a major lifeline for households across the UK, as prices are expected to be £300 lower than previous predictions, and going even lower than what households are paying right now.
They wrote: “Our forecasts show prices in the second half of 2023 remaining below the Energy Price Guarantee (EPG) level, and therefore will not cost the Government any money from July.”
These predictions have led experts to note that soon, the Government may no longer need to pay billions to subsidy household energy bills, and instead could use that “pot of cash” to permanently lower energy costs.
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Commenting on the latest energy price cap forecasts released by Cornwall Insight, Jess Ralston, Energy Analyst at the Energy and Climate Intelligence Unit (ECIU) said: “Extremely mild winter weather across Europe has caused temperature records to tumble, and with them gas prices.
“The Energy Price Guarantee is now predicted to cost the Government nothing in the second half of this year, so there may be a pot of cash available that could be spent on making our leaky homes cheaper to run in the long term.
“Helping people to put in loft and wall insulation now could help to shield households from future gas price volatility, which is a feature of gas markets, while lowering bills.”
Experts have pointed to energy efficiency as a way to permanently lower costs by reducing the gas and electricity needed to power your home, with some analysts estimating that it could save more than £1,000 a year under current prices.
Speaking to Express.co.uk, Ms Ralston urged the Government to boost insulation measures, noting that despite the Cornwall Insight predictions, “Gas prices are still about three times higher than before the crisis so we’re not out of the woods yet.
“Insulating our leaky homes can lower household gas demand, decreasing bills and improving our energy security as we would need to import less in the first place. A push now could help to shield households from volatility, saving them and the taxpayer hundreds of pounds over the next year.”
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