Energy price cap to fall by as much as 7 per cent, according to latest predictions

The energy price cap could by over £100 a year in a couple of months, according to latest predictions.

According to analysis group Cornwall Insight, a typical dual fuel households, which currently pays £1,690 on average, could see their prices fall to £1,574 a year - a drop of around 7 per cent from the current price cap and an overall 25 per cent drop over the past year. It further predicts an additional full in costs in January 2025, but a slight increase in October of this year.

It highlighted that while a reduction in a price cap would be positive for billpayers, it still fails to drop bills to the pre-crisis levels. It has also raised concerns over the ongoing affordability of energy bills.

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Dr Craig Lowrey, Principal Consultant at Cornwall Insight: “When faced with headlines announcing minor changes to the cap it can be easy to overlook the broader trend of declines. Our projections suggest that from July, the average annual bill will fall by around £500 compared to last summer, offering further relief given the quarter-on-quarter drop seen in April.

“Of course, we must recognise lower prices don't erase all the problems. The very fact we are still seeing bill levels which are hundreds of pounds above pre-crisis levels underscores the ongoing challenges faced by households.

“While the cap is certainly not the ticket back to long-term energy bill affordability, Ofgem’s review could pave the way for fairer, more efficient energy bills. However, given the breadth of reforms being considered by the regulator, it is worth remembering that such changes will inevitably lead to trade-offs.

"For example, reducing standing charges, while seemingly beneficial for low-energy users, could lead to higher unit prices. This could disproportionately impact those in less energy-efficient homes or with greater energy needs, some of whom could be vulnerable. Finding the right balance is crucial.

“The path forward for energy pricing remains uncertain, and with stakeholders advocating for reforms – coupled with a general election on the horizon – energy bills are likely to be an area of continued debate and transformation in the months ahead.”

It comes after Ofgem confirmed earlier this year that it would look into the structure of the price cap which could result in some major changes in the near future. One key criticism of the ongoing system is energy standing charges - a flat charge that all billpayers have to fork out for regardless of usage - which campaigners have long called for reform against.