London Daily

Focus on the big picture.

Energy bills set to dip below energy price guarantee level from July, forecaster predicts

Energy bills set to dip below energy price guarantee level from July, forecaster predicts

A closely watched forecast suggests that while the taxpayer may be off the hook for energy support to households from the summer, bills will still be very high by historical standards.

A fall in wholesale energy costs means average annual bills could soon come in below the level of the government's energy support programme, according to a leading forecaster.

Average annual bills under the regulator Ofgem's price cap mechanism are expected to drop to around £2,800 a year from July, Cornwall Insight predicted.

This would mean the government's energy price guarantee (EPG), which limits how much a typical household pays for its wholesale energy, would no longer cost the taxpayer anything - potentially saving billions.

At the moment, if wholesale costs are above a certain level for electricity and gas, the government pays the excess.

This means an average bill of £2,500 for British households, a figure that will rise to £3,000 from April as the EPG's level of support is eased back.

Cornwall Insight predicted average annual bills of £3,545.31 between April and June - dropping sharply during the summer months from July to the £2,800 estimate.

The estimated bill is £300 above the current capped EPG rate of £2,500, but £200 below what the cap will be this summer after the EPG rises to £3,000 in April.

The EPG scheme, introduced by Liz Truss's short-lived government on 1 October, protects families from rises in energy costs by limiting the amount energy companies can charge per unit of energy used.

Behind the fall in prices is a drop in the price of wholesale gas, which dictates the overall cost of energy. Prices spiked throughout last year after Russia's invasion of Ukraine.

Consumers have been warned that bills will remain higher than in 2019, before the pandemic began.

Prices have already fallen from the high in August but it will take time for the effects of price decreases to work their way to customers. Full effects will not be seen until the third quarter of the year, from July to September, as energy suppliers buy energy ahead of time and falling day to day prices have a limited impact in the short-term.

Even if the current, comparatively low levels of wholesale prices are maintained, pressure on government to provide monetary support for bills will still remain as prices stay high. The estimated £2,800 a year cost is more than double the cost of 2021.

"While it is positive to see a drop in the price cap forecast, household bills are set to remain high," said Dr Craig Lowrey, principal consultant at Cornwall Insight said.

"With the Energy Price Guarantee rising in April, the second half of the year will still see a typical household facing bills that are well above historic levels and facing costs that many can ill afford."

Energy bill supports will need to be reviewed, he added. "It is clear that blanket measures of bill support are not providing adequate protection for the most vulnerable and more targeted measures including social tariffs may be something for the government to consider."

"While the details of future support are best left up to the judgement of politicians, the forecasts demonstrate we must look beyond the current policy if we are to see a fairer, more cost-efficient and enduring way of reducing household energy bills for those who need it the most."


Related Articles

London Daily
UK Labour Government to Regulate Powerful AI Models
Record Heat Temperatures in Ukraine Amid Power Crisis
UK Government Plans to Remove 92 Hereditary Peers from House of Lords
King Charles III Delivers Labour Government's First King's Speech
Officials Remove 'Disastrous' Label from Liz Truss's Mini-Budget
Keir Starmer Outlines Ambitious Plans for Government
Japan to Allocate $3.3 Billion to Ukraine Using Frozen Russian Assets
EU Parliament Condemns Hungarian PM's Russia Visit
FBI Struggles to Find Motive Behind Trump Shooting Incident
Kremlin Criticizes EU Rejection of Orban’s Ukraine Peace Proposal
Google and Microsoft Now Consume More Power Than Several Large Countries
Secret Service Criticized for Lack of Sniper Protection During Trump Shooting
US Senator Robert Menendez Found Guilty of Corruption
Deep Concerns about Political Violence as US Approaches Election Day
Trump Media Shares Surge Following Re-Election Bid Boost
The gunman who attempted to assassinate Donald Trump Saturday is 20-year-old Thomas Matthew Crooks
Banksy's Influence on Port Talbot's Street Art Scene
Bodies of Two Men Found in Suitcases on Bristol Bridge, 24-Year-Old Arrested
Kate Middleton to Attend Wimbledon Men's Final Amid Cancer Recovery
Russia's Electronic Warfare Neutralizes Western Weapons in Ukraine
Trump Challenges Biden to Debate and Golf Match
Macron Accuses Israeli Minister of Election Interference
US Senator Highlights Weaknesses in Western Military Industry During Ukraine Conflict
George Clooney Urges Biden to Withdraw from Presidential Race
Political Shift in the UK: A Detailed Analysis of Labour's Victory and Future Prospects
Viktor Orbán's Peace Mission: A Diplomatic Controversy in the EU
India Advocates Peace and Prosperity: PM Modi's Speech in Austria
New UK PM Keir Starmer Reaffirms Strong Support for Ukraine at NATO Summit
Spain PM Pedro Sanchez Denounces Double Standards on Gaza at NATO Summit
UK Police Arrest Suspect in Crossbow Attack After Three Women Killed
Sunita Williams Safe on ISS, to Address Earth on July 10
Biden Affirms Commitment To Presidential Race
France Faces Political Turmoil and Airport Strikes Ahead of Paris Olympics 2024
Putin Hosts PM Modi for a Private Meeting
TSMC: The Taiwanese Chip Giant Valued Over $1 Trillion
Boeing Pleads Guilty Over 737 MAX Crashes
2024 Predicted to Be World's Hottest Year
Iran's President-Elect Masoud Pezeshkian Reiterates Support for Hezbollah
White House Denies Biden Being Treated for Parkinson's Disease
Biden to Meet New UK Prime Minister Keir Starmer
Biden Insists on Continuing Presidential Race Amid Criticism
UK Defence Minister Pledges Enhanced Support to Ukraine
French Prime Minister Gabriel Attal Resigns After Election Setback
Macron Faces New Political Challenges Despite Election Relief
France's Far-Right Falls Short in Parliamentary Elections
Key Figures in France's Left-Wing New Popular Front Bloc
England Reaches Euro 2024 Semifinals After Penalty Shootout Win
Rishi Sunak Apologizes After Historic Tory Defeat
Voter Discontent in Recent UK and French Elections
Trump was recorded attacking Biden: "I kicked the old pile of shit"