Energy bills are set for a significant decrease, with prices set to plummet by up to 15% come April, owing to a decline in wholesale prices.
Regulator Ofgem is poised to formalise this change, with an announcement scheduled for Friday.
According to projections from consultant Cornwall Insight analysts, the energy price cap, currently standing at £1,928, is likely to be reduced to £1,635 effective April 1st. This cap, which governs what suppliers can charge, serves as a benchmark for typical household energy expenses over a year.
Although the anticipated cap of £1,635 remains higher than early 2019 figures, reflecting persistently elevated prices, it signals a significant relief for consumers grappling with soaring energy costs.
Under the new cap, Cornwall estimates electricity prices to be set at 23.27p per kilowatt-hour and gas prices at 5.96p per kilowatt-hour, compared to current rates of 28.62p and 7.42p respectively.
However, alongside the decrease in unit rates, consumers may face an uptick in daily standing charges, which are incurred irrespective of energy consumption. Ofgem’s allowance for suppliers to recoup energy debt from unpaid bills, reaching a record high last year, is expected to drive this increase.
Daily standing charges for electricity and gas are projected to rise from 53.35p and 29.60p to 58p and 30p respectively, as per Cornwall Insight’s estimations.
Ofgem’s decision on whether suppliers can recover debt during the upcoming price cap window, spanning from April to July, remains to be seen.
