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Friday, Sep 05, 2025

Energy price cap set to remain more than £1,000 higher than pre-pandemic average

Energy price cap set to remain more than £1,000 higher than pre-pandemic average

A report warns a "new normal" level for bills is looming, at around the £2,000 level for the average household, though the worst should hopefully be over after a year of record wholesale prices.
The energy price cap is set to remain more than £1,000 higher than the average bill before the COVID pandemic, according to a closely-watched forecast.

Ahead of the industry regulator's determination on the price cap level due next week, energy research specialist Cornwall Insight said it saw the cap for a typical household at the equivalent of £2,053 per year from July-September.

That was down from the £3,280 level set by Ofgem for March-June and reflected continuing falls in wholesale energy costs, particularly for gas, over the year to date which accelerated as winter temperatures gave way.

The price cap does not currently apply due to help for energy bills from the government.

However, the Energy Price Guarantee (EPG), which limits a typical household's energy bill to £2,500 equivalent per year, concludes at the end of June.

Household bills will revert to the price cap from then.

The Cornwall Insight modelling shows a decrease of £1,227 from the April cap level but experts say the outlook for prices remains clouded by the effects of the war in Ukraine and domestic energy security concerns across Europe.

"Despite the cap falling from the sky-high prices of the past two years, the figure remains over £1,000 per year more than the price cap levels seen prior to the pandemic", the report said.

"We do not currently expect bills to return to pre-2020 levels before the end of the decade at the earliest.

"However, we hope to see the reappearance of more competitive fixed-rate energy tariffs as prices begin to stabilise, providing consumers with additional options to manage their energy costs.

"Prices remain subject to wholesale energy market volatility, and our reliance on energy imports (during the winter months) means geopolitical incidents could still have a significant impact on energy prices."

Current modelling suggests the cap from October would rise but only by a token amount compared to the bill shocks of the past year.

Energy costs have been the single biggest headache for the global economy since Russia's invasion of Ukraine last year exacerbated existing upwards pressure on global oil and gas prices.

They have fed their way down supply chains to drive up wider manufacturing and transport costs, leaving businesses and households at the mercy of rising bills across the board.

Dr Craig Lowrey, principal consultant at Cornwall Insight said of the expected energy bills ahead: "Under these predictions, an average consumer would see bills drop by around £450 compared to the existing levels of the EPG, with bills currently predicted to stay relatively stable over the next nine months.

"As many people continue to suffer from the cost-of-living crisis, this will hopefully bring some cautious optimism that the era of exceptionally high energy bills is behind us."
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